The decision by the South African Reserve Bank (SARB) to retain the repo rate at 3.5% (home loan base rate at 7%) is disappointing for the economy and property market, says Samuel Seeff, chairman, Seeff Property Group. “We’ve seen what last year’s rate cuts did for the economy and property market with better than expected results during the second half of 2020,” says Seeff.
Adrian Goslett, regional director and CEO, RE/MAX of Southern Africa, agrees that another interest rate cut could have helped alleviate some of the financial pressure. He advises homeowners to leave room in their budget for a possible increase of around 0.5 basis points during the course of 2021 as the SARB indicated that a gradual repo rate increase was likely towards the end of 2021. Nonetheless, says Seeff, 2021 kicks off with a great buyers’ market, especially in the low to mid-market areas to R1,8m (R3m in some areas) and selectively in the upper price bands. As more buyers take advantage of the record-low interest rate of 7%, mortgage brokers like BetterBond saw bond application volumes increasing by 53% year on year in December.
“The word has spread that the lower interest rate means buyers can afford up to 30% more than if they had applied for a bond in January last year. With so many of us working from home, we’re definitely seeing more buyers applying for bonds to secure their dream homes,” says Betterbond CEO Carl Coetzee.