Rose-Belle Father: Rate Rise Hits Families With '25-Year Loans Hard'

When the Bank of Mauritius raised its key interest rate to 5%, the decision landed in spreadsheets and policy documents for economists. For A.H. a father and homeowner in Rose-Belle, a town in the south-east of Mauritius, it landed in his family budget like a hammer blow.

"It is an alarming situation. They keep dipping into people's pockets," he told ION News via WhatsApp, mixing Creole and French to express a frustration shared by many Mauritian households. "Today, every rupee counts."

A.H. and his family are repaying a 25-year home loan. Every increase in the repo rate, the benchmark rate at which the Bank of Mauritius lends to commercial banks, pushes variable-rate mortgage repayments higher. With fuel costs and grocery bills already elevated, he says the new rate rise tips the balance from tight to unmanageable for families like his.

"This increase is extra pressure on households and individuals who have taken out loans," he said. "With rising fuel and food prices, things will be harder for many families. Behind every economic decision there are also families, difficult choices and sometimes sacrifices."

His comments reflect a broader anxiety in Mauritius. The country has been dealing with a persistent cost-of-living crisis, and critics of the rate decision argue that raising borrowing costs squeezes consumers at precisely the wrong moment. A.H. goes further, warning that the social fabric is already under strain, pointing to recent civil unrest as a sign of mounting public frustration.

"The middle class is becoming poorer," he said. "This risks making an already worrying social situation worse."

The Bank of Mauritius raised the repo rate to 5% at its latest Monetary Policy Committee meeting, citing the need to anchor inflation expectations and stabilise the rupee. Governor Timothy Antoine defended the decision, arguing that price stability ultimately protects the purchasing power of all Mauritians, including those on fixed incomes.

What this means: For anyone with a variable-rate home loan, car loan or personal loan in Mauritius, a higher repo rate typically means commercial banks will raise their own lending rates, increasing monthly repayments. Savers may earn slightly more on deposits, but for the majority of working families carrying debt, the net effect is a tighter monthly budget at a time when essentials are already expensive. Those on fixed-rate loans are shielded for now, but new borrowers will face higher rates immediately.

Source: ION News