The announcement by the South African Reserve Bank’s Monetary Policy Committee earlier today that the repo rate is going down by 100 basis points from 6.25% to 5.25%, following January’s 25 basis point drop from 6.5% to 6.25%, is a welcome – and necessary - step to give the economy a much-need boost, particularly in light of the ongoing effect the Covid-19 pandemic is likely to have on the country.
“The full scale of the pandemic is still revealing itself in South Africa. Our country is not immune from the uncertainty that has gripped international markets in what are proving to be very uncertain times.” says Carl Coetzee, CEO of BetterBond.
While buyers and sellers will understandably be proceeding with caution at present, the reality is that not everyone will be able to place their lives on hold. Circumstances will invariably compel a number of people to proceed with their plans of buying or selling property, and this is where BetterBond comes in – assessing each individual case on merit and helping clients find the best deals in tough times.
For first-time buyers and those who have had their sights set on an ideal property for a long time, this rate brings the dream of homeownership significantly closer.
An important first step for potential buyers is to get pre-qualified, which is the process whereby the bond originator determines the size of the bond the individual qualifies for. Affordability remains key, and Coetzee encourages all potential buyers to make use of the Affordability Calculator on the BetterBond website to ascertain the size of the bond they could qualify for, and can comfortably afford.
“The lower interest rate and the fact that some banks are granting 100% home loans to candidates who meet the necessary requirements is optimistic for buyers. Furthermore, the recent announcement by Finance Minister Tito Mboweni that transfer duty does not apply to the first R1 million on property purchases is another positive for those looking to enter the property market.
In conclusion, Coetzee believes these measures by Treasury are all designed to ease the financial pressure on consumers and to raise confidence in their ability to maintain their monthly home loan repayments, which is very positive and much needed.