News

Rate cut relief

Property investor and entrepreneur, Grant Smee offers insight into the recent repo rate cut announcement

The South African Reserve Bank (SARB) yesterday announced a further 100 basis points reduction to the repo rate, bringing it to an all-time low. It now sits at 4.25% per annum and looks to bring some relief to local property industry.

Grant Smee, Managing Director of Only Realty and found of EPiC South Africa says that while this reduction will result in lower repayments on debts, including mortgages, the actual savings on a 20-year mortgage is only around R63 per month (per R100 000 of the mortgage debt).

“Some relief on our road to recovery is welcomed and I firmly believe that this decision by the SARB was not taken lightly. However, on its own, this measure is not nearly enough to significantly mitigate that the implications the lockdown is going to have on the property market and the broader economy,” says Smee.

What does this mean for investors? “For investors, combining the reduction with repayment holidays offered by financial institutions as well as the hope that landlords and tenants can come to a compromise in terms of rental that can limit losses, will compound the positive effect that the rate reduction is attempting to make,” he says.

Smee believes that the repo rate reduction will provide some relief some homeowners, but will need to be combined with the payment holidays and limited salary reductions (or job losses) over this critical period.

“SARB, business, government, and individuals need to work together to limit the damage caused by the lockdown. It’s a collective effort,” he says.

Website

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top