Reserve Bank Governor Lesetja Kganyago, at today’s Monetary Policy Committee (MPC) meeting, announced that the repo rate would remain the same at 7%, with the home loan prime lending rate at 10.5%. This is good news for many South African consumers already struggling amid the rising costs of living.
The home loan lending rate remains at 10.5%. Try the bond calculator to see what a future increase in the interest rate would mean to your budget.Chairman of the Seeff property group, Samuel Seeff, has welcomed the decision as a “much needed boost for the economy and property market”, following three successive hikes.
Seeff says that although the better than expected April CPI rate of 6.2% is marginally above the Reserve Bank’s target range of 6%, it is slight enough to support the MPC decision to keep the interest rate flat.
“There would have been no value in raising the interest rate right now given that the initial fears of rocketing inflation seem somewhat overstated,” he says. “A rate hike does not serve the economy and the rate hikes have in any event done little to deter consumer spending.”
In a more buoyant economy, a higher interest rate would be acceptable for a fair and balanced market, but as things stand, the economy would be better served by a stable interest rate, says Seeff.
The property market too “could do with a bit of a boost” although activity remains very satisfactory, he says.
“While transacting below the levels of 2014 and early part of 2015, the market nonetheless remains fairly active. We have not yet seen the 'gloom and doom' predicted at the start of the year, save perhaps for the mining towns.”
Bear in mind though that there will always be people who need to buy for a range of reasons, a move for work or perhaps to downgrade or even upgrade to a better home or neighbourhood, he says.
This is good news notwithstanding, rising interest rates and general living cost inflation are set to remain a challenge this year, and Seeff urges consumers, homeowners and buyers who have not already factored this into their forward planning, to start doing so.
Try the bond calculator to see what a future increase in the interest rate would mean to your budget.
He says as the year progresses and more stock comes onto the market, sellers will face increasing pressure to price competitively.
On the upside, the “decline in price growth seems to have halted for now” according to the latest bank indicators and, all-round, Seeff still sees a very satisfactory market.
“All eyes will now be on the upcoming local elections with some expected shifts of power from the ruling party,” adds Seeff, which should “hopefully be a strong signal that government needs to lift its game as poor service delivery, inefficiency, waste and corruption does not support economic growth”.
“And, without a good economy, we cannot expect a good property market,” says Seeff.
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