Welcome Relief for Consumers Courtesy of Repo Rate Cut

  • Post category:News

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 AmountInterest Saving Over 20 YearsMonthly Savings
R250 000R38 884R162
R500 000R77 767R324
R750 000R116 651R486
R1 000 000R155 534R648
R1 250 000R194 419R810
R1 500 000R233 302R972
R2 000 000R311 070R1 296
R3 000 000R466 604R1 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.