What an Interest Rate Cut Means for the Residential Property Market
Category Principal's Message
Cutting the repo rate will help stimulate the housing market.
The MPC announced lowering of the repo rate by 25 basis points. The repo rate drops to 6.25% and the prime lending rate changes to 9.75%.
The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks.
This cut will provide relief to homeowners who are battling to keep up with their monthly repayments, thereby lowering the number of homes that will enter the market and evening out the scales of supply and demand.
Lower interest rates are likely to incentivise consumers to take on debt, which should increase the number of buyers looking to purchase property over this time.
The rate cut provides a better chance of securing a sale timeously and at the full asking price, while buyers will enjoy lower instalments on their bond repayments.
All in all, the repo rate reduction will hopefully kick-start a more positive first quarter, which we hope will continue into the second quarter of 2020. This bodes particularly well for those looking to enter the market for the first time.
We know affordability remains a key concern as households struggle amidst a stagnant economy, which is why financial relief, however marginal, is great news.
Author: Prime Property Marketing
