Lower Bond rates mean RSBs may also be set lower on 1 August

  • As at 27 July, SA Government bond yields have reduced by between 0.10% and 0.14% since the end of June 2018.

  • Given that RSB rates are set off these rates at the end of each month and rates are likely to close lower for the month, there is a possibility that the yield on all RSB rate terms will fall 0.25% in August 2018.

  • Unless there are significant changes in Government Bond rates in the last few days of July, it is unlikely rates will be going higher – so it makes sense for those intending to invest shortly to do so before the end of July.

The spread between Government Bonds and RSBs has been at recent highs, however, when using the recent average spread for each term, suggests the chance of a rate decrease or at very least stay at current levels.

5-year Government Bond Rates vs. Retail Savings Bond Rate Forecast

  • Investors considering a Fixed rate RSB investment still have time to invest at the known July rates, which are looking to be higher than the August expectation

  • Regular savers and income earners should keep an eye on all their current bonds to ensure yield is being maximized via any potential re-starts.

  • Note that re-starts can only be exercised on or before the 20th of each month, but new bonds can be bought after the 20th at that month’s rate

  •  For over 60s, we suggest investing in the 5-year bonds with monthly interest (rather than 2 or 3 yr bonds)  Read more here.

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