select
|

Home owners: make the most of the repo rate

On Thursday the SARB Monetary Policy Committee elected not to raise the repo rate which will remain unchanged at 5.5% until the next meeting on the 17th of July.

While it seems unlikely that the repo rate will be increased again this year, "The committee continues to hold the view that we are in a rising interest rate cycle, and interest rates will have to be normalised in due course. We embarked on this process with our first move in January 2014. At this stage the pace and timing of normalisation in the advanced economies appears to have been pushed out further and may be more moderate than previously believed. We are also aware that this can change very quickly".

Writing for Business Day Bronwyn Nortje believes "the big question is by how much the Bank will choose to raise rates when it begins doing so. At the moment it seems the market has priced in about 100 basis points over the next year".

"While we welcome the Bank's decision to leave the repo rate as is for the moment, Leapfrog's message remains the same; we'd like to urge home owners to pay as much into their bonds as possible now, before the repo rate increases again - thereby putting more pressure on households", says Bruce Swain, MD of Leapfrog Property Group.

This advice is in line with statements made by FNB Household and Property Sector Strategist, John Loos who reiterated that "The South African Household Sector as a group remains poorly-prepared for a normal interest rate hiking cycle, or any other significant economic shocks".

Loos bases this belief in part on the fact that Household Debt-to-Disposable Income Ratio stands at 74.3% and, even more disconcertingly, that the South Africa's Household Sector Net Savings Rate is currently at zero.

"While we advise current home owners to pay into their bonds now we also advise prospective home owners to take a rate hiking cycle into account when budgeting to buy a property, in order to avoid hardships later on. What is certain is that there will be a hike at some point so it's best to make the most of the current reprieve", says Swain.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 17 Jan 2017
      From fresh colours to faux leather, 2017 is set to be a big year for home interiors and we take a look at some of the trends we cannot wait to try out!
    • 17 Jan 2017
      The tranquil, unassuming suburb of Bergvliet in Cape Town’s Constantia Valley achieved record sale prices in 2016 despite the national economic slump, with average house prices increasing by some 10% since the end of 2015.
    • 17 Jan 2017
      While it may sound like a reasonably easy thing to do, finding the ideal home may take a little more time and effort than most expect, especially if the potential buyer doesn’t follow any specific process.
    • 16 Jan 2017
      Situated in the sought-after Pretoria East estate, Mooikloof Equestrian Estate, our Property Pick of the day is an elegant home with more than just modern convenience. ?
    • 16 Jan 2017
      The Baby Boomer generation is renowned for being non-conformist – and its members are once again doing things differently when it comes to deciding where to live in their later years.
    • 16 Jan 2017
      Consumer confidence as a driver of long-term decision making will be the key to the recovery of the residential property market in 2017.
    • 16 Jan 2017
      Robert Broom is one of the main arteries that runs through Krugersdorp in the Westrand, crossing through Noordheuwel, Rangeview and past the Sugarbush Estate. Residential property in these areas are increasingly in demand as they offer great value both in terms of sectional title and freehold properties and access to good schools and amenities.
    • 14 Jan 2017
      Sellers sometimes receive more than one offer to purchase (OTP) on their properties at a time, especially for homes in sought-after areas, says Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK