Still favorable interest rate decision for homeowners and new buyers
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Prospective home owners have a new opportunity to take advantage of favorable purchasing conditions after the Monetary Policy Committee chose to keep the interest rate unchanged at 3.5%.
The decision, announced Thursday afternoon by the governor of the South African Reserve Bank Lesetja Kganyago, was widely expected by real estate players.
While the prime rate also remains stable at an almost 50-year low of 7%, Andrew Golding, managing director of the Pam Golding Property Group, said it was unlikely to fall further.
“So, for potential homeowners, it’s a reminder that if you are considering buying a home, now would be a good time …”
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Adrian Goslett, Managing Director of Re / Max of Southern Africa, agrees: “Homeowners and first-time buyers continue to be in a favorable position when it comes to the interest rate on their mortgage.
While a further cut would have helped many South Africans who are struggling to make ends meet in the current economy, he notes that keeping rates at historic lows will “at the very least” allow homeowners to keep up. more easily repayments. on their home loans in a difficult economic context.
Goslett predicts that interest rates are expected to remain stable for the remainder of the year, but urges homeowners to make room in their budgets for a possible increase of around 0.5 point during 2021.
“The MPC has warned of two potential increases of 25 basis points in the second and fourth quarters of 2021, but it all depends on how the economy performs and many economists predict that an increase is unlikely to be necessary. As unlikely as it may or may not be, homeowners should just keep this in mind when budgeting for the coming year.
Real estate market activity was boosted significantly last year following the series of interest rate cuts and many agents have reported better sales so far this year than in the same period the last year. In February, Goslett said Re / Max’s reported sales for the year reflected 33% growth from the same period last year. Recorded sales are also up 50% this year, so far.
“Our partner, BetterBond, has also seen their mortgage value increase by 46% over this period, highlighting how low interest rates have made owning their dream home a reality for many more. of South Africans. ”
Echoing this, Golding says 2020 saw strong home buying activity.
“In fact, according to the FNB, 2020 has seen the highest volume of mortgage approvals in South Africa for more than a decade.”
Despite the uncertainties surrounding the pandemic, he says the residential real estate market has “so far proven to be one of the most resilient sectors in the country.”
“Combined with generally more realistic pricing, a ripple effect continues to filter through the market, putting upward pressure on demand across the different price brackets …
If business continues at this rate, Goslett believes it won’t be long before the market shifts in favor of sellers, with buyers having to outbid each other to get the properties they want.
“Before this change occurs, I would recommend buyers to act quickly and make the most of current market conditions.”
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