The Monetary Policy Committee (MPC) announced some positive news for our country today by lowering the interest rate by 25 basis points. The repo rate drops to 6.25% and the prime lending rate changes to 9.75%.
“We commend the MPC for making the decision to lower interest rates at this meeting. The MPC has acted prudently by seizing this opportunity to further stimulate our economy by announcing a cut in interest rates at this time,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
This decision will also have positive consequences for the housing market. “This cut will provide further relief to homeowners who are battling to keep up with their monthly repayments, thereby lessening the number of homes that will enter the market and evening out the scales of supply and demand. Lower interest rates are likely to incentivise consumers to take on debt, which should, in turn, increase the number of buyers looking to purchase property over this time. I therefore remain hopeful that this announcement will translate into some corrective growth for the housing market,” Goslett explains.
On an individual level, Goslett explains that this announcement will affect South Africans in different ways. “If you are a seller, this announcement provides a better chance of securing a sale timeously and at the full asking price. If you are a buyer, it means that you will enjoy lower instalments on your bond repayments over this period. If you have no plans of buying or selling your home before the next MPC meeting next year, it means that you will either have some cash to spare thanks to the money saved on your monthly instalments, or the opportunity to save on interest charges and shorten the lending term by keeping your repayments the same as they were before the interest rate cut happened,” Goslett suggests.
Whichever of the above categories in which you find yourself, Goslett recommends that you do what you can to take advantage of the lower interest rate while it lasts. “Interest rates change depending on the economy’s performance which is ever-changing and easily influenced by external factors. This makes it difficult to predict how long we will enjoy the current interest rates. I would, therefore, encourage all South Africans to speak to a trusted real estate advisor or financial planner to find out how they can be maximising on the current rates while they last,” Goslett concludes.
