Lower rate is good news for homeowners
CAPE TOWN - The property sector yesterday welcomed the SA Reserve Bank (SARB) decision to cut the repo rate by 100 basis points, charging that it would provide relief to consumers and homeowners.
RE/MAX chief executive Adrian Goslett said the decision would help to keep the economy “somewhat stable over this time.”
Goslett said the rate cut would provide further relief to homeowners who were battling to keep up with their monthly repayments.
He said it was however unlikely to have any major effects on the housing market, apart from lessening the number of homes that would enter the market as a result of the bank’s distressed property sales programmes.
“Property investments generate high returns in the long run,” Goslett said. “Rather than taking on bad debts - which eat into disposable income - homeowners could take advantage of the interest rate cut by redirecting the money they're saving straight back into their home loan. “This will save them on interest charges and reduce their home loan period by months or even years.”
Pam Golding Property group chief executive Andrew Golding said the cut would likely lead to increased confidence among investors and home buyers.
The Pam Golding Residential Property Index showed that while national house price inflation slowed in February, house price inflation in Gauteng appeared to be stabilising at 1.91percent while both the Western Cape and KwaZulu-Natal housing markets continued to rebound at 5.36percent and 3.12percent respectively.
FNB chief economist Mamello Matikinca-Ngwenya said while policy easing was not a solution to the effects of the virus, it should help to boost demand and ensure financial stability.