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Comment on the interest rate announcementFollowing the rate cut we saw at the last Monetary Policy Committee meeting, the decision to keep the rate stable is the correct one for the current market, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
Reserve Bank Governor, Gill Marcus, announced earlier today at the Monetary Policy Committee meeting that the repo rate and prime lending rate will remain steady along their current paths. This comes after a decision to cut the prime lending rate from 9% to a remarkably low 8.5% during the July meeting.
Although the lower rate brought about some further relief for homeowners with high debt-to-income levels, it has not had a dramatic impact on the amount of new buyers entering the market. The fact remains that while the market conditions currently favour buyers, many are still struggling to meet the bank’s lending requirements because of their low levels of disposable income.
While the current low lending rate should help potential buyers to reduce their existing debt, any further rate cuts will only encourage consumers to incur further debt and won’t have the desired effect of reducing debt and starting savings regimes over the long term. Those who wish to purchase property in the future should be focused on making the most of the current conditions and taking the steps to ensure that their debt is minimised and that they have the required deposit saved up to obtain the necessary finance.