No change to interest rates, says Reserve Bank
A sharp drop in the price of oil and lower demand for credit has persuaded the Reserve Bank not to increase interest rates.
New Reserve Bank Governor Lesetja Kganyago announced today that thanks to lower demand for private sector credit,a sharp drop in oil prices that drove the inflation rate down to 5,9% at the end of October and weak economic growth, the Monetary Policy Committee has decided to leave interest rates unchanged.
He said it had been unanimously decided to keep the repo rate – which is the rate at which the Reserve Bank lends to commercial banks – at 5,75% and prime (as well as the variable home loan interest rate) at 9,25%.
As a result, the repayment on a 20-year home loan of R763 543 – which is the current national average approved bond amount – will remain at R6993 per month, according to SA’s leading mortgage origination group BetterBond Home Loans, while the repayment on the average home loan of R645 007 that is currently being approved for first-time buyers will stay at R5907 per month.
“In addition,” notes BetterBond CEO Shaun Rademeyer, “there will also be no increase for now in car instalments, credit card repayments or other debt commitments, and this will give households a further opportunity to lower their debt burden now if they spend carefully over the year-end holiday period, and put themselves in a much better financial position by next year.”
Meanwhile the stasis in interest rates, he says, will further boost consumer confidence in the residential property market (and not least because it speaks of better economic times to come) but it will probably not make much difference to sales numbers, or prices, until developers re-enter the market strongly and start delivering new stock.
