Good news for borrowers: interest rates are on their way down. By December next year your overdraft or your housing bond could be costing you three percentage points less.
This is the view of some of the country's top economists who say we could be in line for up to three cuts over the next 18 months.
There are, however, a few buts. If the rand does another dive, or people and businesses borrow too much, then the cuts could be delayed or reversed. At the beginning of this year there was also general agreement that interest rates could come down but the rand crashed and the economists had to go back to their crystal balls.
The views of the economists are important for your planning, particularly now that the banks are offering different interest rate structures.
For example if you opt for a two-year fixed rate loan that is not flexible you could find yourself paying somewhat more than your neighbour by the end of next year.
Those who take the "insured" capped option being offered by a few banks, where with a monthly fee they receive a lower capped rate, can still benefit from dropping interest rates.
Duncan Reekie, Standard Bank divisional general manager (home loans ), says by taking this option you are assured of the best of both worlds, even though you could be paying slightly more than your neighbour when rates come down as you would still have to pay the premium.
The new option offers an immediate reduction to a rate of 17,5 percent a year cushioning the increased cost of the premium.
Reekie says after paying the capping fee on a 17,5 percent rate you are effectively paying 18,42 percent (if the premium is paid monthly) and 18,28 percent (if the premium is paid fully in advance).
"Then you have the peace of mind over a one or two-year period that your rate will not go up and the flexibility to benefit by a fall in rates when the underlying flexible rate on the contract falls below the capped rate."
If the 18,25 percent uncapped rate drops to 17,25 percent your 17,5 percent capped rate will also fall by 0,25 percent age points but you will still have to pay the premium, which will give you an effective rate of 18,16 perent. If the rate drops to 16,25 percent you will pay an effective rate of 17,17 percent (in both cases when the premium is paid monthly).
The gamble is yours.
Here are the views of some economists on future interest rates:
Pieter Laubscher of the Bureau of Economic Research: Two percentage points over the next nine months with the first in September or October.
Johan Louw, chief economist Sanlam: One percentage point this year and two next year.
Sandra Gordon, Syfrets chief economist: One percentage point this year and hopefully two next year.
Dave Mohr, Old Mutual chief economist: One percentage point this year and a possible three percentage points next year.
Dr Azar Jammine of Econometrix: One percentage point by year end, another one percentage point by the close of 1997 and a further two percentage points by the end of 1988.
Laubscher says there are three reasons for likely cuts. These are:
* The easing of the tough stance of the Reserve Bank on monetary policy (but he says the Reserve Bank is reluctant to ease conditions further because banks are still lending too much money);
* As the economy slows down fewer people and companies will be borrowing money, easing pressure on interest rates; and
* Inflation rates are expected to stay in single digit territory.