RE/MAX comments on interest rate announcement

As expected the decision was made to leave the interest rates unchanged at the last Money Policy Committee meeting of 2012, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He says that it is highly likely that the interest rates have bottomed, especially since the surprise rate cut earlier this year. He added that a further rate cut would require a significant decline in economic rudiments. Gill Marcus, Reserve Bank Governor said that both the repo rate and prime lending rate would not deviate from their current path of 5% and 8.5% respectively.

The decision to keep the rate steady is largely based on the fact that the goal of the South African Reserve Bank inflation-targeting monetary policy is to keep inflation between 3% and 6%, and in September this year inflation rose to 5.56%. The increase has largely been attributed to housing utility costs, petrol hikes and higher food pricing.  Inflation could breach the top figure of 6% during 2013 with the rising cost of living and new calculations of price data. Goslett says that this largely rules out any interest rate cuts in the near future.

Although no further rates cuts are expected, Goslett points out that the current rate is still highly favourable for homeowners and prospective buyers, bearing in mind that the last time South African consumers experienced rates at this level was in 1974. While some micro property markets are slowly beginning to transition, for the most part we are still in a buyer’s market. Buyers with a good credit record and access to finance should take advantage of the current conditions before the market changes.  

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