DURBAN - Today’s decision by the Reserve Bank to cut the repo rate by a further 50 basis points to 3.75 percent, reducing the home loan rate to 7.25 percent provides further vital savings to property buyers and bond holders, says Samuel Seeff, chairman of the Seeff Property Group.
These are unprecedented and uncertain times and we need as much support from the Reserve Bank as possible to boost confidence to invest in the property market and economy as we emerge from the Lockdown. Especially, says Seeff, as inflation is expected to remain well within the 3 percent - 6 percent target range.
This is the fourth interest rate cut this year. Aside from the financial relief for households, it has created an unprecedented opportunity for buyers to take advantage of the near five-decade low borrowing costs and drastically improved affordability.
The rate cuts this year has already provided considerable savings of over R1400 per month on a R1 million home loan (over twenty years) and this cut now adds a further R300 plus saving.
Affordability has improved drastically. If you had purchased a R1 million property at 10 percent, your gross monthly income requirement was at around R33000 per month. It has now reduced by over R5000, a significant benefit for buyers to take advantage of the interest savings and transfer duty exemption.
Seeff says that it is especially favourable for the low to mid-market range to R1.5 million (up to R3 million in some areas) where we have seen the bulk of activity. Buyers who are financially able to buy now have more property to choose from as stock levels are higher than what they have been for some time.
After an exhaustive wait, sellers are beginning to negotiate and consider lower offers. While we do not know what the lending climate will look like post-Lockdown, lending conditions remain favourable for the time being.
Seeff says that there is interest from buyers. Our agents have made many successful sales under Lockdown with many more pending physical viewings but the longer the Lockdown lasts, the more the challenges are piling up for the economy and property market.
While many support structures of the market such as the deeds offices, conveyancers and the banks are becoming operational, buyers are extremely frustrated with the Level 4 restrictions. They cannot comprehend the logic of not being able to view a property and so that they can move forward with their property transactions.
Samuel Seeff, chairman of the Seeff Property Group