Psychological boost of low interest rate

Recent newspaper accounts have covered in full the effect the latest interest rate drop could have on the property market – and the consensus of opinion is that the 0,5% drop is, in rand terms, really too small to make a significant difference. However, says Rob Lawrence, National Manager of Rawson Finance, the last 10 or 12 days have shown that the drop has had a significant psychological effect on potential property buyers.

“Many who were waiting in the wings for some form of encouragement have now come forward and applied for bonds. It seems that this latest drop has triggered a more positive outlook on the market. We are now fielding 20% more applications than we did in June/July.”

Lawrence pointed out that the rates now are the lowest ever since 1981 (29 years ago).

“If you can qualify for a bond, there can, therefore, be no better time to invest in a home – especially as rate rises, although inevitable in the long run, are unlikely before 2012.”

The bond origination sector, said Lawrence, had been hard hit by the banks’ reluctance to give bonds – but he added, those still in this sector, like Rawson Finance, tend to be “the real professionals”, the firms with a good track record who do know how to improve the client’s chances of getting a bond.

“At Rawson Finance our hit rate is now at 54% which is well up on that of a year ago. For those thinking of buying, now is the time to talk to firms like ours. Home asking prices are still some 15 to 20% off their 2006 peak and this makes the chances of getting real value for money exceptionally good, especially if you buy a distressed property, while they are still available.”

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