Borrowers were handed a New Year gift this week when banks announced fresh interest rate cuts.
Mercantile led the charge with a one percentage point cut in its prime overdraft rate (the rate the bank charges its best customers).
NBS, FNB, ABSA, Nedcor (Nedbank, Permanent Bank and People's Bank) and Standard Bank soon followed suit and by yesterday afternoon all the main banks had cut their prime overdraft and home loan rates to 22 percent.
And more interest rate cuts are likely this year, say economists.
Boland Bank economist Francois Jansen, Nedcor Investment Bank Asset Management's Sandra Gordon and Standard Corporate and Merchant Bank Asset Management's John Liackman see the prime overdraft rate at about 18 percent by year end, with base home loan rates following the prime rate downwards.
Old Mutual Asset Management's Johan Els thinks the prime overdraft rate could drop as far as 17 percent by December.
Gordon says the sluggish economy, lower inflation and falling interest rates in Europe and the United States all point to further interest rate cuts.
Much depends, though, on the country's accounts with the rest of the world. Demand for South Africa's exports is shrinking, not only in crisis-ridden Asia but also in Europe and the United States.
Lower export earnings coupled with hefty import bills mean deficits which can only be financed by big inflows of capital, and this could prompt the monetary authorities to keep interest rates high to attract foreign funds.
* To calculate what this week's cuts mean for your budget, consult our home loan calculator.