Nearly half of respondents to a Debt Rescue survey say they do not know how they would cope with another interest rate increase, suggesting that many financially stressed consumers may be reaching the limits of their ability to absorb further economic shocks.
Conducted after the South African Reserve Bank’s latest policy rate increase, the survey found widespread concern about the combined impact of borrowing costs, fuel prices, and rising living expenses.
Debt Rescue said the survey was conducted through its digital platforms to gauge consumer sentiment regarding interest rates and cost-of-living pressures. The company did not disclose the number of respondents.
In May, the SARB raised the policy rate by 25 basis points to 7%, lifting the prime lending rate to 10.5%. The increase came as consumer inflation accelerated to 4.5% in May from 4% in April, driven largely by higher fuel prices.
According to the survey, 48.5% of respondents said a further interest rate increase would place their households under severe financial pressure, and they do not know how they would cope. A further 32.2% said they would need to make significant cuts to their budgets, while 16.5% said the impact would be manageable with adjustments. Only 2.9% said a further increase would have no real effect on their finances.
The survey also found that 77.5% of respondents expect interest rates to rise again before the end of the year, with 40.7% anticipating a significant increase and 36.8% expecting a smaller one. Another 12.8% were unsure whether rates would increase further, while 9.7% believed there would be no additional increases.
According to Debt Rescue founder and chief executive Neil Roets, those expectations matter because consumer sentiment often shapes financial behaviour before economic events occur.
“When households anticipate future financial pressure, they typically become more cautious, reduce discretionary spending, and delay major financial decisions,” he said. “The survey suggests that many consumers are already preparing for a more difficult financial environment, regardless of whether further increases materialise.”
Evidence of consumer strain is emerging elsewhere. Although South Africa’s first-quarter GDP growth surprised on the upside, household consumption – a key driver of the country’s consumer-led economy – slowed sharply to 0.1% from 1.2% in the previous quarter.
Citadel chief economist Maarten Ackerman described the slowdown as concerning, noting that consumers were already under pressure before the latest geopolitical and inflationary risks emerged.
What is most striking, said Roets, is not simply that consumers are worried about higher interest rates, but that so many believe they would struggle to cope with another increase. After several years of rising food, fuel, electricity, and borrowing costs, many households may be reaching a point where there is little room left to absorb further financial shocks.
Cost-of-living pressures meet debt-servicing costs
The survey suggests much of that pressure is centred on basic living costs. When asked which area of their finances would be hardest hit by another interest rate increase, 50.9% of respondents pointed to food, electricity, and other essential household expenses. Another 27.8% identified debt repayments such as credit cards, loans, and store accounts, while 13.9% highlighted fuel and transport costs, and 7.5% pointed to home or vehicle finance repayments.
The ranking mirrors current affordability pressures. Food and groceries were identified by 39.6% of respondents as the most difficult household expense to afford, followed by fuel and transport at 28.6%, electricity and utilities at 19.6%, and debt repayments at 12.1%.
The findings suggest that consumers increasingly experience higher borrowing costs as part of a broader affordability challenge rather than as 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,” said Roets. “Consumers experience these pressures collectively, not individually.”
Interest rates can be particularly difficult for households to offset. Consumers may be able to reduce electricity usage, shop more carefully, or cut discretionary spending, but there is generally far less flexibility when it comes to contractual debt obligations linked to homes, vehicles, and other financed assets.
“Home loans, vehicle finance, and other credit agreements form part of a household’s long-term financial structure,” said Roets. “Unlike many day-to-day expenses, these obligations cannot easily be reduced or postponed.”
That reality is reflected in the survey’s findings on debt repayment risk. A combined 66.9% of respondents said there is at least some likelihood that they could fall behind on monthly debt repayments if borrowing costs continue to rise, including 37.9% who said it is very likely and 29.1% who said it is somewhat likely.
Cutting back, borrowing more, or seeking help
The most common response to further rate increases would be to cut spending. Nearly seven in ten respondents (68.7%) said they would cope by reducing expenditure, including spending on essential items. Another 8.8% said they would delay or miss some payments, while 7.7% would use additional credit to survive financially. A further 7% said they would seek financial assistance such as debt review, while 7.7% said they would not need to change anything.
The survey also points to a significant willingness to seek help if financial conditions deteriorate further. While 28.9% of respondents said they would try to manage on their own, 26% said they might seek assistance depending on the size of the increase. Another 23.6% said they would seek help if their finances worsened further, while 21.6% said they would seek assistance urgently.
A growing crisis of confidence
The findings suggest that concern extends beyond debt repayments. More than four in five respondents expressed concern about the combined impact of fuel prices and higher interest rates on household finances, with 49.6% saying they are extremely concerned, and a further 31.3% saying they are very concerned. In addition, 81.9% believe rising global oil prices will significantly increase financial pressure on South African households.
The survey also paints a picture of declining financial confidence. More than half of respondents (56.8%) said they are not prepared at all for another interest rate increase, while 53.5% said they do not feel financially secure about the next six months if living costs continue to rise.
Emotionally, the impact is equally striking. A combined 74.2% of respondents said the prospect of higher interest rates leaves them feeling stressed, worried, anxious, or overwhelmed. Of these, 37.9% described themselves as extremely anxious or overwhelmed, while 36.3% said they feel stressed and worried.
According to Roets, these responses point to a broader erosion of household financial resilience.
“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.”
Market expectations for further tightening have moderated since the recent easing in oil prices following the United States-Iran peace agreement. Traders have scaled back expectations for the SARB’s 23 July policy meeting and are now pricing in only modest additional tightening. For households already struggling with rising food, fuel, electricity, and debt-servicing costs, however, even a relatively small increase may prove difficult to absorb.
The significance of the survey, said Roets, is not the prospect of another interest rate increase itself, but what it discloses about household financial resilience. The findings suggest that many respondents believe they have little meaningful financial buffer left if economic pressures intensify further.
Roets said consumers experiencing sustained financial distress should seek assistance from a registered debt counsellor as early as possible, before debt becomes unmanageable.
He added that the consequences of prolonged financial stress extend beyond household budgets and can affect family well-being more broadly.
