Flat repo rate welcomed amidst slow economy
The decision to retain the flat repo rate at its current standing of 6,50% (base home loan rate of 10%) has been welcomed by the Seeff Property Group. The market largely expected this outcome given the better than expected consumer inflation figure of 4.6% for June (lower than the market expectation of 4.8%), despite the weaker exchange rate.
While the currency fluctuation poses a risk of monetary policy tightening, analysts say that although inflation remains within the 3%-6% target range, the Reserve Bank is likely to keep the interest rate at its current standing for the rest of this year.
Stuart Manning, CEO of the group, said the decision was good news for consumers, particularly those with mortgage bonds. He said the market was holding up well despite the economic challenges, and while slower, there was still price growth and many reasons to buy. Many areas are seeing excellent trade with especially the lower to mid-market sectors being quite active.
Although market commentators and analysts are always quick to highlight the negative side of the market without necessarily weighing the balance, Manning said there was opportunity in every market. “Any market is a scale and when one side goes down, the other goes up”. He said many sellers were still making good deals as they adapted to the changing conditions. And while they were not necessarily seeing stellar profits, they were still making money.
When the sales side of the property market does down and finances are under pressure, the rental side of the market tends to do better with more demand for rental property. Rates may be under pressure, but the good news for landlords is that they can still fill their units/homes and at least continue earning returns.
