In­te­rest ra­tes un­chan­ged

George Herald - Auto Dealer - - News -

The­re w­he­re no sur­pri­ses at the first Mo­ne­ta­ry Po­li­cy Com­mit­tee of 2018, as Re­ser­ve Bank Go­ver­nor, Le­setja K­ga­ny­a­go, an­noun­ced that the in­te­rest ra­tes would stay at their cur­rent le­vels. The pri­me len­ding ra­te will re­main at 10,25%, whi­le the re­po ra­te stays put at 6,75%. Whi­le the rand has streng­the­ned, and in­fla­ti­on has lar­ge­ly been con­tai­ned, the MPC re­mains cau­ti­ous in their ap­pro­ach and bi­as to­wards upsi­de in­fla­ti­o­na­ry ris­ks.

Ac­cor­ding to e­co­no­mis­ts, the­re are a few t­hings in the me­di­um term that could ne­ga­ti­ve­ly im­pact the e­co­nomy, which is why the MPC has ai­red on the si­de of cau­ti­on. The re­cent sur­ge in the oil p­ri­ce could pre­sent an in­fla­ti­o­na­ry risk, and all ey­es are on the u­p­co­ming Fe­bru­a­ry bud­get which could bring tax hi­kes. The ra­ting a­gen­cy Moody’s is al­so set to an­noun­ce its de­ci­si­on on the coun­try’s cre­dit ra­ting, which is being re­vie­wed for pos­si­ble do­wn­gra­de. The­se as­pects could af­fect the e­co­nomy and on­ce a­gain bring a­bout in­fla­ti­o­na­ry con­cerns.

Re­gi­o­nal Di­rec­tor and CEO of RE/MAX of Sout­hern A­fri­ca, A­dri­an Gos­lett, says that whi­le in­te­rest ra­tes re­main fa­vou­ra­ble and sta­ble, ho­me­o­w­ners should try and pla­ce them­sel­ves in the be­st pos­si­ble fi­nan­ci­al si­tu­a­ti­on to be a­ble to mi­ti­ga­te any e­co­no­mic chan­ges in the fu­tu­re. “A ste­a­dy low-in­te­rest ra­te gi­ves con­su­mers the op­por­tu­ni­ty to cre­a­te an e­mer­gen­cy fund that will see them through any fi­nan­ci­al­ly chal­len­ging ti­mes they could fa­ce in the fu­tu­re. It is al­so an op­por­tu­ni­ty to re­du­ce their le­vel of debt be­fo­re a­not­her hi­king cy­cle,” he says.

Gos­lett adds that pe­ri­ods of in­te­rest ra­te sta­bi­li­ty al­so pro­vi­de ho­me­o­w­ners with the op­por­tu­ni­ty to bud­get and pos­si­bly pay ex­tra in­to their bond ac­counts to re­du­ce the a­mount of in­te­rest paid, as well as re­du­cing the term of the lo­an. “If a ho­me­o­w­ner has a bond of R1-mil­li­on at the cur­rent pri­me in­te­rest ra­te of 10,25% o­ver 20 y­e­ars, and they paid an ad­di­ti­o­nal R500 in­to the bond e­very month, they will re­du­ce the term of the lo­an by al­most three y­e­ars, and they will sa­ve R221 106 in in­te­rest,” he ex­plains.

P­ho­to: www.the­sout­h­a­fri­

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