Interest rates remain unchanged

No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels. The prime lending rate will remain at 10.25%, while the repo rate stays put at 6.75%. While the Rand has strengthened, and inflation has largely been contained, the MPC remains cautious in their approach and bias towards upside inflationary risks.

According to economists, there are a few things in the medium term that could negatively impact the economy, which is why the MPC has aired on the side of caution. The recent surge in the oil price could present an inflationary risk, and all eyes are on the upcoming February budget which could bring tax hikes. Rating agency, Moody’s is also set to announce its decision on the country’s credit rating, which is being reviewed for possible downgrade. These aspects could affect the economy and once again bring about inflationary concerns.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that while interest rates remain favourable and stable, homeowners should try and place themselves in the best possible financial situation to be able to mitigate any economic changes in the future. “A steady low-interest rate gives consumers the opportunity to create an emergency fund that will see them through any financially challenging times they could face the future. It is also an opportunity to reduce their level of debt before another hiking cycle,” he says. 

Goslett adds that periods of interest rate stability also provide homeowners with the opportunity to budget and possibly pay extra into their bond accounts to reduce the amount of interest paid, as well as reducing the term of the loan. “If a homeowner has a bond of R1 million at the current prime interest rate of 10.25% over 20 years, and they paid an additional R500 into the bond every month, they will reduce the term of the loan by almost three years, and they will save R221 106 in interest,” he explains.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
    • 21 Feb 2018
      These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us