Latest bank interest rates open up residential property market to buyers.
Category News
Much attention has quite rightly, been given to the Covid-19 epidemic in the news media. Other major shifts in the economic sphere are simply not getting the coverage they deserve and the impact they could have is overlooked, says Rowan Alexander, Director of Alexander Swart Property, the Cape Town estate agency prominent in the city's northern suburbs. In the property sector this applies very definitely to the recent decision by the SA Reserve Bank's Monetary Policy Committee to cut the repo rate by 100 basis points, the biggest and most significant cut in eight years.
The cut is designed to counter the negative effect of factors such as the Eskom crisis and unreliable electricity supplies, the loss of confidence caused by many State Owned Enterprises failing to pay their way, the reality of SA being reduced to junk status by the international investment community, the steady withdrawal of foreign funds and the expectation of a negative growth rate for the year ahead - but for those able to capitalise on it, the lower repo rate opens new property buy opportunities.
"With the repo rate at 5, 2% per annum," said Alexander, "the banks' prime interest rate is at 8.75% and many bond applicants are now granted loans at 1% BELOW prime i.e. at 7.75%. To understand how these rates make typical residential properties more affordable, one must realise that on a R1 million bond the monthly payments are reduced from R 9,485 to R 8,837 while on a R3 million bond the payments are reduced by R 1,911 to R 26,511.
If you qualify for a bond, now is the time to climb in and make the most of the customer friendly rates. What makes the opportunities even more attractive is that there is a strong likelihood of further interest rate reductions in future." The cut, added Alexander, would also provide welcome relief to existing bond holders, some who might be able to use the saving to reduce their bond holding period, by paying above the monthly stipulated rate.
Alexander Swart staff, mostly young and proactive, tends to be technically sophisticated and are rapidly adapting to the current lockdown period by communicating with clients via laptops and cellphones. Alexander estimates that they will notch up a further 5 sales within two weeks of the end of lockdown. We are determined to show that a competent agency can beat the difficulties and indeed make use of new ways of doing business, which we will take with us into the post-Corona era."
For further information, please contact Rowan Alexander on 082 581 3116 or rowan@aspg.co.za
Author: Rowan Alexander
