Herschel Jawitz, CEO of Jawitz Properties comments on the reduction in the Repo Rate.
The decision by the South African Reserve Bank to cut interest rates has been welcomed as a decisive move. Not only will the cut have an impact on affordability for home buyers and offer home owners some respite in terms of their disposable income but more importantly consumers may start to feel more confident about the direction of the economy.
If consumers feel more confident, they will make longer term spending decisions of which buying a home is one of the biggest. The impact of the 0.25 % cut in rates for every million rand on a 20 year mortgage at the new prime rate of 10.25% will be a monthly decrease in repayments of R160.
If you add to this the further reductions this year in transfer duty thresholds, first time buyers have a further opportunity to get into the market.