A survey conducted by Debt Rescue has revealed that nearly half of its respondents said they would not be able to survive another interest rate hike, as it would significantly hurt their wallets and affect food, electricity and other basic living expenses.
The survey was conducted in early June after the South African Reserve Bank (Sarb) announced a hike to the interest rate for the first time in three years. Debt Rescue is a debt counselling company.
The survey was done to examine South Africans’ expectations regarding future interest rate movements, household financial resilience, affordability pressures and debt repayment risks.
It was found that 48.5% of respondents would experience severe financial pressure should there be another hike, and do not know how they would manage if interest rates increased any further.
Another 32.2% said they would need to make significant budget cuts to cope, while 77.5% of respondents expected interest rates to rise again before the end of the year, suggesting that many believe the recent increase may not be the last.
Households’ finances will not survive another interest rate hike
Debt and consumer finance specialist Neil Roets said the findings suggest a broader decline in household financial resilience.
He noted that people are already preparing for a more difficult financial environment, regardless of whether further increases materialise.
“When households anticipate future financial pressure, they typically become more cautious, reduce discretionary spending and delay major financial decisions.”
Concern among households
“What is most evident is not simply that consumers are worried about higher interest rates, it is that so many respondents believe they would struggle to cope with another increase,” said Roets.
“Over the past few years, households have faced repeated increases in the cost of living, from food and fuel to electricity and debt costs. The survey suggests that many consumers may now be reaching a point where there is very little room left to absorb further financial shocks.”
Unlike many other rising costs, people often have limited ability to offset the impact of higher interest rates.
While households may successfully reduce electricity consumption, look for cheaper alternatives at the supermarket or cut back on discretionary spending, there is generally far less flexibility when it comes to contractual debt repayments linked to homes, vehicles and other financed assets.
What people would cut
The survey also asked respondents what they would cut from their budgets in response to further interest rate increases.
68.7% of respondents said they would cut spending, including spending on essential items. Meanwhile, 66.9% acknowledged at least some likelihood that they could fall behind on debt repayments if borrowing costs continue to rise, with 38% saying it is very likely.
Roets said these findings highlight the impact that interest rates have on household finances.
“Interest rate hikes affect some of the most important financial commitments consumers make. Home loans, vehicle finance and other credit agreements form part of a household’s long-term financial structure. Unlike many day-to-day expenses, these obligations cannot easily be reduced or postponed.”
Cost-of-living pressures continue to mount
The survey revealed that 50.9% of respondents believe food, electricity and other basic living expenses would be the area of their finances most impacted by further interest rate increases.
Food and groceries remain among the most difficult household expenses to afford, according to 39.6% of respondents, followed by fuel and transport costs (28.6%) and electricity and utilities (19.6%).
These findings suggest that South Africans increasingly view rising borrowing costs as part of a broader affordability challenge rather than an isolated debt issue.
“Every additional rand spent servicing debt is a rand that is no longer available for groceries, transport or other household necessities. Consumers experience these pressures collectively, not individually,” said Roets.
Financial anxiety remains high
The survey revealed that 74.2% of respondents felt stressed, worried, anxious or overwhelmed about the prospect of further interest rate increases.
More than half (56.8%) said they felt unprepared for another increase, while 53.5% reported feeling financially insecure about the next six months.
More than 80% also expressed concern about the combined impact of rising fuel prices and interest rates on their household finances.
Financial resilience
According to Roets, the findings indicate that many households are becoming increasingly concerned about their ability to absorb future financial shocks.
“Financial resilience is not only reflected in income levels or debt balances. It is also reflected in a household’s confidence that it can withstand unexpected financial pressure,” he said.
“Consumers are not only worried about the next interest rate increase; many are anxious about whether they have the capacity to absorb any additional financial pressure at all.”
With inflation up from 4% in April to 4.5% in May, this concern is entirely warranted. The next announcement by the central bank’s Monetary Policy Committee (MPC) will be on 23 July 2026.
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