The South African Reserve Bank has officially cut its interest rate, following the unanimous decision by the Monetary Policy Committee - lowering the repo rate from 6.75% to 6.5% per annum for the first time since March last year.
Met with excitement from various industries, the announcement of the repo rate cut promises to positively affect the real estate market in South Africa.
The Repo Rate is the rate at which a country's central bank (The South African Reserve Bank) lends money to the country's commercial banks and is set by the Reserve Bank's Monetary Policy Committee.
Any changes in the Repo Rate will affect the prime lending rate, which is the lowest interest rate at which a commercial bank will start lending to their clients. With the 25 basis point drop in the Repo Rate, the top lending rate will decrease to 10%, from its previous 10.25%.
"The rate cut has made the purchase of property slightly more affordable and has a positive impact on the bank's lending criteria – simply put, more people will now qualify for bonds, and this will stimulate the property market.
Buyers that have been sitting on the fence will enter the market with renewed confidence and hopefully, the lowering of the repo rate will follow with more rates cuts in the near future."
As the Prime Lending Rate will now be set at 10%, current homeowners will save on their home loans. For every R100 000 borrowed, a monthly saving of roughly R16 will apply, on a loan of R1m; the saving translates to R166/month which could equate to nearly R40 000 over 20 years.
The diminished rate also means that those individuals applying for their first home loan will now find it a bit easier to qualify; with the new household income requirement for an R1m loan adjusted to R32 000/month from a previous R33 000.
With the market leaning towards buyer favour, now is the perfect time to invest in one of the fastest-growing residential areas in South Africa. Stretching along the stunning northern coastline of KwaZulu-Natal, the Dolphin Coast is known for its warm weather, sunny beaches and some of the finest properties in the province.
To find your Dolphin Coast home visit our website.
If you are looking to invest in property on the Dolphin Coast, contact the dedicated team at
Engel & Völkers KZN Dolphin Coast on 031 880 0989 today.