Financial relief may be coming for South African homeowners
There may be good news for South African homeowners this week. That's because some economists are expecting the South African Reserve Bank (SARB) to cut the repo rate when it meets on Thursday.
The SARB cut rates thrice since July 2024. There is hope that this cycle will continue into 2025, and some experts say this could come as soon as this month.
Reducing the repo rate would affect interest rates, and means South African homeowners will pay less on their bond instalments. With interest taking up a hefty part of bond payments, the savings could be significant. According to BusinessTech , the average property owner could end up saving several hundred rand in this rate-cutting cycle.
Economists in favour of an interest rate cut, including those at the Bank of America, have a handful of arguments. Inflation is at 2.8%, well within the SARB's target, and the dollar exchange rate is under R18/$. Other central banks, including those in the United Kingdom, Europe and China, have cut rates since April.
However, many economists in South Africa note that the SARB is traditionally cautious. With ongoing global uncertainty and volatility in the rand, the bank may delay cutting interest rates, and South African homeowners may have to wait for financial relief.
The Monetary Policy Committee (MPC) of the SARB will make the decision. Whether they cut or maintain the interest rates, economists agree that the committee is unlikely to be united in their decision. So, even if rates don't come down this week, there may still be cuts in the coming months.
The average price of a new home in South Africa is R1 661 519. In July 2024, the interest rate was 11.75%. It's currently at 11% after January's cut.
BusinessTech calculates the following savings for South African homeowners between July 2024 and May 2025: A bond of R850 000 saved R438 in monthly repayments
A bond of R1 661 519 (the average home price) saved R856 in monthly repayments
saved R856 in monthly repayments A bond of R2 million saved R1030 in monthly repayments
Further rate cuts will only enhance savings for homeowners.
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