Repo Rate remains stable at 8.25%, bringing a sense of relief to homeowners.
Category Advice
Breaking News! The SARB's Monetary Policy Committee decided to keep the repurchase rate at its current level of 8.25% per year.
Repo rate pause great news for consumers and property heading into festive season.
The decision by the Monetary Policy Committee to keep the repo rate unchanged at 8.25% (prime and base home loan rate 11.75%) is great news for the economy and property market.
While we would have preferred a small rate cut as a boost heading into the busy season for retail and real estate, we are nonetheless pleased at the Bank's decision, especially given the inflationary pressure. This also follows suit from other main central banks (the Fed, ECB, and BoE) who have kept their rates unchanged.
While the market has contracted, it has remained resilient and in many areas is still ahead of the 2019 pre-Covid figures as buyers have sought to take advantage of the favourable buying conditions.
Aside from the continued positive mortgage lending conditions, the market is further supported by the flat prices and loads of good stock on the market. Sellers who are listing at the correct asking price are still finding buyers, if not, they may have to relook their price, or wait a while.
The upside is that we can look forward to entering the 2024 year with the hope that interest rates will start coming down by around midyear if the economy can settle and conditions are stable.
Given that inflation increased to 5,4% in September from 4,8% in August, it is understandable that interest rates would either have had to remain steady or possibly could have even increased to keep inflation in check. The decision to keep them steady is a relief for the property market, as many homeowners are already starting to reach out for help to cope with the higher home loan repayments.
Silver linings, however, include the fact that lenders are increasingly hungry to secure qualified bond applicants, leading 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.
Lenders seem to be taking a 'bigger picture' approach to property finance, using it as a way to secure long-term customers across a much wider range of banking products. Understanding this trend can be useful when it comes to negotiating mortgage offers.
Extract from Property 24
Author: Extract from Property 24
