RE/MAX Regional Support Office: Southern Africa - JOINT MEDIA RELEASE - INTEREST RATE CUT - IMPACT ON RESIDENTIAL PROPERTY MARKET AND BOND REPAYMENTS by RE/MAX of Southern Africa & BetterBond

JOINT MEDIA RELEASE - INTEREST RATE CUT –
IMPACT ON RESIDENTIAL PROPERTY MARKET AND BOND REPAYMENTS

by RE/MAX of Southern Africa & Betterbond

Cape Town – The Monetary Policy Committee’s decision today to cut the repo rate by 100 basis points resulting in a prime lending rate to 13 % will not have an immediate effect on property sales, but is good news for South African landlords, according to Adrian Goslett, RE/MAX of Southern Africa Assistant Director.

“The rate cut purely has an impact on the affordability of credit, but does not alleviate the liquidity shortage.   It still remains very difficult for the average buyer to obtain a home loan.  The stringent lending criteria imposed by the banks, who not only reject 60 % of applications, but require a 20 % deposit for those loans approved, places affordability out of reach for most buyers,” says Goslett.

“The demand for rental property will, however, remain high.  Landlords stand to benefit from the rate cut, which will result in a reduction in the cost of servicing bonds supported by favorable rental income levels.”

Says Deon Lessing, Marketing Director: Betterbond - “Following the MPC’s decision today, consumers will be able to better service their debts, giving the banks comfort to start lending again.  Less stringent lending criteria, especially by downscaling deposits required by banks, is what is needed to coax the market and property sales into moving again.”

Source:  Betterbond & RE/MAX of Southern Africa