No change in repo rate, as predicted
CASH-strapped consumers, and home owners in particular, have been given a double dose of good news this week after the Reserve Bank’s Monetary Policy Committee (MPC) yesterday retained the repo rate at 7%, meaning the base home loan rate was also left static at 10.5%
This follows the release of Stats SA’s latest inflation figures on Wednesday which showed that overall inflation last month, assisted by lower inflation rates in food and non-alcoholic drinks, transport and miscellaneous goods and services prices, had decreased to 5.3% from 6.1% in March.
Last month’s figure, which now falls into the central bank’s target range for inflation, was the first time the rate had dipped below 6% territory since August.
Seeff Property Group chairman Samuel Seeff welcomed the retention of the current repo rate, saying the MPC decision had been expected.
“We expected this decision given that there has been no further economic upheaval since the cabinet reshuffle and change of the finance minister at the end of March.” he said.
“Although the rand remains volatile, good news this week came in the form of a lower inflation rate, while the International Monetary Fund also recently upgraded the economic growth rate to 1% [from 0.8%] for this year.”
Seeff said a flat interest rate and lower inflation gave more breathing space to consumers and home owners, and allowed buyers to still benefit from a rate saving and get slightly bigger bonds.
“This is good for the property market, which continues at a fairly balanced pace,” he said.
Pam Golding Properties chief executive Andrew Golding said while yesterday’s MPC decision had been expected, a reduction would have provided a much-needed boost for consumer confidence and market sentiment given the ongoing weak economic growth experienced in South Africa.
“It would also provide added incentive for savvy first-time buyers wanting to gain a foothold on the property ladder,” he said.
“While we await the ratings announcement from Moody’s, and against the backdrop of volatile sociopolitical factors and slower national house price inflation, the residential property market overall remains strongly resilient.”