Retail banks are still uncertain how they will accommodate changes in the "repo" (repurchase) rate the new interest rate mechanism introduced by the Reserve Bank last week or how this will affect you.
The repo rate replaces the old bank rate at which banks borrow money from the Reserve Bank and which is used by the banks to determine your overdraft and home loan rates.
The new repo rate is expected to be far more volatile than the old rate as it will follow the market rather than a Reserve Bank decree.
But this does not mean your bank interest rates will be altered on a monthly basis like the petrol price.
Stuart Grobler, general manager at the Council of South African Banks (Cosab), says the repo rate could cause confusion in the market.
Chris Stals, the Reserve Bank governor, has fixed the repo rate at 15 percent for one week to give the banks time to adjust to the new system.
After that the repo rate will be determined by market conditions and the banks' liquidity.
Banks will have no idea how frequently the repo rate will change until it happens, says Grobler.
Cosab has been investigating a market indicator that banks could use to determine whether they should change their rates.
"But that would be an indicator only and not a benchmark. Banks would take their own decision on what their interest rates should be," he says.
Banking sources generally agree that lending and home loan interest rates for consumers will fluctuate more frequently and possibly in smaller amounts than in the past.
Ian Jones, head of retail sales at First National Bank, says: "We need some time for the repo rate to take hold. Each bank has its own funding mix and has access to different funds in the market, so we'll have to see how the prices are determined" .
He says it will be impossible for banks to change their rates too frequently.
The Usury Act requires that you are informed in writing within 30 days of any change to the interest rate affecting you.
Informing clients of a change also costs the bank money.
"The costs have to be borne by somebody and it is likely that banks could pass them onto their clients," he says.
Jones says FNB has just under 160 000 home loans and at postal rates of R1 a letter that amounts to R160 000 just for the postage before the cost of the paper, envelopes and manpower involved in getting the letters out is calculated.
Frequent interest rate changes could also have administrative repercussions for government departments, because civil servants' housing subsidies will go up and down in line with the interest rate.
Market indicators have been pointing to a lower interest rate for some time and the new repo rate of 15 percent, two percent below the old bank rate, has triggered a drop in the interest rates.
Five big banking groups, Nedcor (Nedbank, Perm and People's Bank), Standard Bank and Absa (Volkskas, Allied, United and Trust Bank), First National Bank and NBS Boland have all dropped their prime rates by one percentage point to 18,25 percent -- the first drop since October last year.
Niche banks Mercantile Lisbon and BOE have also dropped their rates by a percentage point.