Today’s announcement by the South African Reserve Bank Monetary Policy Committee (MPC) of a 100 basis points cut in the repo rate, from 6.25% to 5.25%, brings welcome relief for debt-burdened consumers at a time when the Coronavirus pandemic is causing widespread disruption to daily life across the globe.
This cut will give the economy a much-needed boo at a time when the full scale of the pandemic is ill revealing itself in South Africa. Our country is not immune from the uncertainty that has gripped international markets in what are proving to be very uncertain times.
While buyers and sellers will understandably be proceeding with caution at present, the reality is that not everyone will be able to place their lives on hold and this is where we as MHG Home Loans have an important role to play. Circumstances will invariably compel a number of people to proceed with their plans of buying or selling property, and this is where MHG Home Loans comes in – assessing each individual case on merit and helping clients find the be deals in tough times.
For first-time buyers and those who have had their sights set on an ideal property for a long time, the rate cut brings the dream of homeownership a significant step closer.
This table gives a brief overview of the effect of this latest rate cut on a 20-year bond:
|Bond Amount||Interest Saving Over 20 Years||Monthly Savings|
|R250 000||R38 884||R162|
|R500 000||R77 767||R324|
|R750 000||R116 651||R486|
|R1 000 000||R155 534||R648|
|R1 250 000||R194 419||R810|
|R1 500 000||R233 302||R972|
|R2 000 000||R311 070||R1 296|
|R3 000 000||R466 604||R1 945|
The positive news for prospective purchasers is that they do not have to be discouraged, because while no-one knows how long it will take, there is no doubt that an economic upturn is bound to follow.
An economic recovery always follows a period of downturns and this will be no different. The challenge, of course, is to remain calm and ay positive, while so much is in flux. But this is exactly what MHG Home Loans will be doing and when things stabilise, buyers will be buoyed once more and sellers will advance as well.
In light of present challenges, this rate cut brings real relief and will enable greater numbers of South Africans to meet their all-important mortgage payments on a monthly basis, setting themselves up for a solid financial future thanks to the fact that they will be able to maintain their homeownership status, and this is good news for many of us.