Today’s Monetary Policy Committee decision to cut interest rates by 25 basis points, means bond holders on a R1m home, paid off over 20 years, now save R170 per month on their bond repayments.
This is according to Herschel Jawitz, CEO of Jawitz Properties, who, along with the rest of the real estate industry welcomed the rate cut.
“With the latest inflation figures comfortably within the 3% to 6% band, and the downgrade risk from Moody’s avoided for now, the Reserve Bank needed to show consistency of policy,” he said. “If rates weren’t cut today then I’m not sure under what circumstances they would ever be cut. Despite the looming increase in VAT and the petrol price levy, consumer confidence will receive a much-needed boost from the rate cut.”
The Repo rate is now 6.5%, while prime is 10%.
“I think now was the perfect opportunity to stimulate the economy with a rate cut,” said regional director and CEO of RE/MAX of Southern Africa, Adrian Goslett. “Leading up to today, there have been many encouraging signs and consequent offshoots that have impacted the economy positively. We applaud the decision of the Monetary Policy Committee to make the cut, as we believe that this will continue to stimulate growth and strengthen investments.”
The housing market will, however, have to wait for the benefits to filter through, said Andrew Golding, CE of the Pam Golding Property group.
“The benefits of this modest reduction may take longer than usual to be felt as households will need to adjust to the hike in VAT and the general increase in the tax burden via the fuel levy and other tariffs such as electricity, water and property rates,” said Golding.