Comment on Latest Interest Rate Cut

Private Property South Africa
Antoinette McDonald

If this week’s decision by the Reserve Bank’s Monetary Policy Committee is the start of a dive in interest rates then we’ll all be happy campers.

That seems to sum up the feelings of real estate gurus who say the market needs a major boost. They say prime needs to drop lower than the 13% the MPC dropped it to this week.

“This is a welcome but somewhat tentative move in my view,” says Simon Stockley, CEO of home loans provider Integer. “Scope did exist for a larger cut given the inflation outlook and the reality of a looming recession. But the committee has responded once again with caution and a degree of trepidation. The cut is welcome news for the property sector and is likely to fuel the tentative signs of recovery that are beginning to emerge.”

Stockley said ordinary South Africans have been “hurting”. He pointed to reports from FNB to the effect that 8% (or 1 360) of FNB's 170 000 home loan costumers are in arrears for three months or more.

“In short I say thanks to the MPC, but we would like some more,” Stockley says.

According to FNB property strategist John Loos, the two interest rate reductions this year means on a R500 000, 20-year bond at prime rate, the reduction in the monthly payments is now R912.

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