The debt counselling service said 48.5% of respondents did not know how they would cope with higher rates, while 32.2% indicated they would need to make cuts to their budgets.
It found that 74.2% of those interviewed feel stressed, worried, anxious or overwhelmed about the prospect of further interest rate increases, while 56.8% are unprepared and 53.5% feel financially insecure about the next six months.
More than 80% were worried about the combined impact of rising fuel prices and interest rates on their household finances.
The survey, conducted by Debt Rescue earlier in June, examined consumer expectations regarding future interest rate movements, household financial resilience, affordability pressures and debt repayment risks.
“What is most evident is not simply that consumers are worried about higher interest rates, it is that so many respondents believe they would struggle to cope with another increase,” debt and consumer finance specialist Neil Roets said.
“Over the past few years, households have faced repeated increases in the cost of living, from food and fuel to electricity and debt costs. The survey suggests that many consumers may now be reaching a point where there is little room left to absorb further financial shocks.”
Debt Rescue’s findings point to a broader decline in household financial resilience, and the expectation of further interest rate increases is significant because consumer sentiment often provides an early indication of financial behaviour, Roets said.
When households anticipate future financial pressure, they typically become more cautious, reduce discretionary spending and delay major financial decisions. Many consumers seem to be already preparing for a more difficult financial environment, regardless of whether further increases materialise.
This concurs with predictions by traders, who have scaled back bets on additional interest rate hikes after the recent US-Iran peace deal sent oil prices tumbling, potentially reducing inflationary pressures, Debt Rescue said.
While households may successfully reduce electricity consumption, look for cheaper alternatives at the supermarket or cut back on discretionary spending, there is generally far less flexibility when it comes to contractual debt repayments linked to homes, vehicles and other financed assets.
Asked in the Debt Rescue survey how they would respond if borrowing costs continued to rise, 66.9% of respondents acknowledged they could fall behind on debt repayments, with 38% saying this was very likely.
“Interest rate hikes affect some of the most important financial commitments consumers make. Home loans, vehicle finance and other credit agreements form part of a household’s long-term financial structure. Unlike many day-to-day expenses, these obligations cannot easily be reduced or postponed,” Roets said.
The survey indicates that many consumers may be reaching the limits of what they can absorb financially, he said.
Just more than half of respondents, 50.9%, believe food, electricity and other basic living expenses would be the area of their finances most affected by further rate increases.
Food and groceries remain the most difficult household expense to afford, according to 39.6% of respondents, followed by fuel and transport costs (28.6%) and electricity and utilities (19.6%).
“Every additional rand spent servicing debt is a rand that is no longer available for groceries, transport or other household necessities. Consumers experience these pressures collectively, not individually,” Roets said.