DURBAN - Following the economic impact the Covid-19 pandemic has had on our economy, the Monetary Policy Committee has lowered the interest rate by 50 basis points, creating a window of opportunity for first-time homeowners.
This reduction marks the fourth drop in the prime interest rate this year, which takes the repo rate to 3.75% while the prime lending rate remains stagnant at 7.25%.
With interest rates at a 50 year low, a possibility is emerging whereby it may become cheaper to buy than to rent, says Carl Coetzee, BetterBond ceo.
David Sedgwick - managing director of Horizon Capital Residential, a boutique commercial property investment and development company based in Cape Town, agrees that the drop in interest rates provides stimulus to the market and results in increased affordability and improved consumer confidence.
While the thought of low interest rates may be appealing, real estate agency experts say that until the industry is in full swing, buyers will have to take a leap of faith and sign on the dotted line without viewing in real life their property purchases.
This comes due to the current lockdown regulations which have been out in place.
However, the current level 4 lockdown regulations have posed as a great obstacle in the lives of many buyers, according to Samuel Seeff of Seeff Property Group.
“The longer the lockdown lasts, the more the challenges are piling up for the economy and property market,” explained Seeff.
“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,” he said.
According to First National Bank’s chief executive officer Jacques Celliers, the move comes as an indication that the South African Reserve Bank is committed to protecting the country’s economy and helping credit customers to reduce debt servicing costs.
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