Regarding interest rates the Reserve Bank’s Monetary Policy Committee decided in September 2015 to leave the repo rate unchanged at 6% – and the prime lending rate and the variable mortgage rate unchanged at 9,5%.
Stable interest rates: good news for home owners
This is good news for consumers and home owners, because it means that their minimum monthly repayments on any kind of debt – including credit and store card balances, vehicle purchase agreements and home loans – will not be increasing, and that they have another opportunity to use any extra cash to reduce those debts.
The Bank’s decision was expected by most economists and property market commentators, including Jors van Niekerk, CEO of mortgage originator Mortgage Max.
“The reason is that the global economic scenario has changed substantially in the past few months, mostly thanks to the sudden slowdown in China’s growth and thus in the demand for commodities such as iron ore, coal and gold which fuel many emerging economies, including ours. In fact, such is the level of economic uncertainty that even the US Federal Reserve has decided to delay its long-anticipated increase in borrowing costs now until at least November and possibly even until next year.”
This delay, he explains, has given the Reserve Bank a “breathing space” to hold rates at their current levels and hopefully bolster local economic growth, employment levels and business confidence.
“However, Van Niekerk notes, the reprieve may be short-lived because of the weakness of the rand, which has been trading at above R12 to the US dollar for much of this year. “The main cause of this weakness is the current lack of interest that investors globally are showing in emerging currencies, and the Reserve Bank will no doubt already be looking for the right moment to raise rates and try to rekindle some of that interest.
Consequently, we would advise those who are thinking of buying a new home now to do so without delay, while it is still relatively easy to qualify for the home loan. This may be the last chance they get before interest rates do start to rise. They will also really benefit by enlisting the help of a reputable mortgage originator to ensure that they get the best available deal.”