With the furore over the recent interest rate rises and accusations of illegal collusion some competition has slipped into banking. In fact there are now signs of a healthy war.
First of all Absa Bank, went out on its own to lead the retreat by dropping leading rates by one percent. By Thursday all the lenders were down by one percent with general opinion being the move followed easing in financial market conditions as well as the harshness of consumer resistance.
But ABSA was being challenged for the applause.
Standard Bank upped (or lowered) the stakes by coming in with a fancy new product attached to an insurance policy against retrogressive increases in the mortgage bond rate.
Five hours later Nedcor moved taking its base rate down to 17,5 percent without any frills for both their current and future clients but with the rate fixed for either one or two years.
Standard Bank's new option is a "capped" interest rate which comes with a two percentage points drop in the rate with a minimum rate of 17,25 percent (including the one percent drop).With the option you take insurance against a rise.
Standard Bank chief executive Mike Vosloo said for most customers the insurance charge of 70 cents in every R1 000 would be less than the saving in interest and reduced monthly payment.
Capping for a R100 000 loan would costs R70 a month. A customer now paying 19,25 percent would save R135 a month on interest giving an actual saving of R65 a month.
If interest rates drop further the lower insured rate will drop in tandem but if they go up the rate stays the same. In other words you win on both the ups and the downs. The insurance can be taken for one or two years.