Some relief for homeowners as repo rate remains unchanged
People in the property business have welcomed the decision, with Rawson Properties saying that this is a step in the right direction.
Homeowners in Randfontein and Krugersdorp can breathe a sigh of relief as the repo rate remains unchanged at 8.25%.
This comes after the South African Reserve Bank made the announcement recently, thus keeping the rate unchanged for the third consecutive time.
What this means is that people’s payments towards their bond installments will remain the same and will not eat away at their pockets much further, for now.
Leonard Kondowe, who is a Finance Manager for Rawson Property Finance, welcomes the decision by the reserve bank.
“Pegging interest rates at their current levels is a step in the right direction for the property market right now. However, should the interest rate go up in the future, property along with other markets will feel the pinch? As it stands, there are already huge numbers of homeowners struggling to make ends meet, and any further interest rate increases will only exacerbate those issues,” said Kondowe.
He added that the distressed property market is busier than ever, but the lack of affordability means the pool of qualified buyers is also very small.
According to him, there is a silver lining at the end of the day which includes the fact that lenders are increasingly hungry to secure qualified bond applicants and this essentially leads to a very competitive lending market.
“Lenders are definitely bringing their A-game when it comes to winning over bond applicants. That’s not to say they’re being lenient on qualifying conditions – those are still as strict as ever – but for applicants with a strong financial history and good affordability, there are some very favourable finance opportunities out there. Common techniques used by lenders to ‘sweeten the pot’ for bond applicants include offering preferential interest rates to those willing to move their primary bank account to the same brand,” said Kondowe.
As for what consumers can do to improve their financial resilience, Kondowe said the key is to curb unnecessary spending and reduce debt.
