Drop in Interest Rate Great News for Buyers

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The announcement by the South African Reserve Bank’s Monetary Policy Committee yesterday that the repo rate will go down by 25 basis points from 6.5% to 6.25%, and the prime lending rate and home loan “base rate” to 9,75%. This drop in interest rate is great news for the economy in general and for the property market in particular.

In contrast to the consensus among economists, Reserve Bank Governor Lesetja Kganyago opted to lower the repo rate. We welcome a drop in interest rate as we believe it to be exactly what our stagnant economy needs in order to stimulate growth.

In the buyer’s market that we’re currently experiencing, a lower interest rate makes property more affordable and thus more accessible to more buyers, particularly those looking to enter the market for the 1st time.

For example, on a bond of R825 000 with a 10% interest rate, the monthly repayments are around R7,961. With the drop in interest rate, this reduces the minimum monthly repayment amount to R7,825, which eases the financial burden on the bond holder with a saving of R136 per month.

In light of this good news, we want to encourage buyers to take advantage of the situation by investing in property. With interest rates dropping, buyers can be confident about their ability to maintain their home loan repayments without feeling the effects of added financial pressure.