STABLE RATES KEEP THE WINDOW OPEN FOR HOMEBUYERS
Category News
The decision was announced by Reserve Bank Governor Lesetja Kganyago and is good news for consumers in general
as well as homeowners, because it means that their minimum monthly repayments on any kind of debt – including credit
and store card balances, vehicle purchase agreements and home loans – will not be increasing, and that they have
another opportunity to use any extra cash to reduce those debts.
The Bank’s decision was expected by most economists and property market commentators in spite of the June increase
in the inflation rate to 6,3% from 6,1%, because of the urgent need to try to stimulate economic growth at this stage and
prevent SA from tipping into recession by the end of the year.
Growth is projected at 0% this year and this is also resulting in higher unemployment and putting SA’s investment ratings
at risk when they are re-evaluated in December.
What is more, most consumers are already watching their spending very carefully because their budgets are so stretched
by higher food prices (up 11% year-on-year), higher electricity prices and the effects of the interest rate increases
announced earlier this year, so it is doubtful that an interest rate increase at this stage would actually have done much to
curb inflation.
Meanwhile, the rand has been doing much better lately (trading at R 14,24 to the US dollar on Thursday afternoon) and
the oil price has stayed under $ 50 a barrel, so there is less upward pressure on inflation now and it could in fact go
below the MPC’s 6% ceiling by next year without intervention.
In any case, this week’s decision is positive, especially for homeowners whose monthly bond repayments will remain the
same, and homebuyers who have been given two more months to qualify for home loans at the current rate of interest.
Indeed, we would advise those who are thinking of buying a new home now to do so without delay, as economists are
still expecting at least one more interest rate increase this year.
Prospective buyers will also benefit by enlisting the help of a reputable originator such as MortgageMax which will not
only give them the best chance of securing a home loan, but ensure that they get the best available interest rate.
Author: Jors van Niekerk