Rates Reaction – RE/MAX of Southern Africa

CAPE TOWN (March 23) – Today’s interest rate cut of 100 basis points in the repurchase rate has been welcomed by RE/MAX of Southern Africa, not just for the much-needed relief it will deliver existing home owners and market stimulation, but for the Government’s timeous response to the situation.

The rate adjustment was supported by the commercial banks with the lowering of their lending rates to the public i.e. prime and mortgage rates, by 100 basis points to a new level of 13 percent from the current 14 percent.

The announcement was made by the country’s Monetary Policy Committee meeting, which had been advanced by one month of its planned next meeting. It has also decided to break from the tradition of holding bi-monthly meetings to a more hands on approach by holding monthly meetings for the rest of the year with the exception of July.

Today’s adjustment means the MPC has now adjusted the repurchase rate by 2,5 percentage points from its peak of 12 percent in December.

A clearly pleased Adrian Goslett, Assistant Regional Director of RE/MAX Southern Africa, complimented both aspects of the MPC’s policy - that of today’s rate cut and new monthly meeting policy – noting that the committee had moved in line with international trends of speedy rate adjustments therefore affirming its hands on approach to swift changing market conditions.

Today’s news was being underpinned in the media by a strong school of economic forecast of a further downward rate adjustment at the next MPC meeting and further cuts later in the year. If realised, this would introduce far greater stability to the property market.

While there was little doubt that residential sales had suffered from high interest rates and the banks more stringent lending patterns, Goslett believed the slowdown had had some positive effects on the market, particularly in introducing more realism in selling prices. However, there was no doubt that trading levels had been seriously affected and now needed today’s MPC stimulation. Inspite of this he believed the value of property ownership had been “too negatively understated”. Today’s cut would help in returning ownership to its true long-term positive perspective.

Article from: www.rodneyhayter.com