50 Points rate cut!

The South African Reserve Bank’s Monetary Policy Committee (MPC) lowered the key monetary policy interest rate – the repo rate – by another 50 basis points to 5,5%. On the back of this latest cut in the repo rate, Absa announced that its lending rates to the public, i.e. prime and variable mortgage rates, will decline by the same magnitude to a level of 9%, effective from 19 November 2010.

Interest rates have been cut by a cumulative 650 basis points since December 2008, which brings the mortgage rate to its lowest level since December 1973, while the prime rate is back to a level last seen in May 1974. On the back of the further drop in the mortgage rate, monthly repayments on mortgage loans will in general be 33,5% lower compared with early December 2008 when the mortgage rate was still at a level of 15,5%.

The further cut in interest rates came on the back of recent developments in respect of the domestic economy. Year-on-year growth in manufacturing production tapered off to only 1,4% in September; employment remained under pressure up to the third quarter of the year; and the Reserve Bank’s leading business cycle indicator moved largely sideways in the past few months up to August, suggesting that the performance of the economy could remain around current levels towards the end of the year and into early 2011.

Consumers continue to experience some financial pressure in the wake of still high levels of debt in relation to disposable income, job losses and relatively tight credit conditions. Growth in credit extension to the household sector improved during the course of the year after bottoming in late 2009, but is still well below the 10% level on an annual basis. Consumer confidence was largely unchanged in 2010, while business confidence came under further pressure in October.

Consumer price inflation, at 3,2% year-on-year in September, is at its lowest level since December 2005. This was to some extent the result of continued rand strength on the back of a weak US dollar, while food price inflation remains benign. The CPI inflation rate is forecast to remain low in the rest of the year and is expected to rise only gradually during 2011.

The direction of interest rates in 2011 will to a large extent depend on economic developments and consequent movements in key economic indicators, such as consumer price inflation, during the course of the year.

Article By Jacques du Toit 18 Nov 2010 and private Property.

Rentekoers

Hi Julle,

Ongelukkig geen verlaging in die rentekoers nie maar gelukkig ook nie 'n verhoging nie. Die ekonome voorspel dan ook nie 'n verdere verlaging nie maar glo dan ook dat dit onveranderd sal bly vir die volgende kwartaal of twee. Volgens die meeste banke toon die eiendomsmark dan reeds 'n positiewe groei wat dan ook weer 'n effek op die huispryse sal uitoefen. By ons het ons nie regtig 'n afname (behalwe 'n afname op die eiendomme wat van die begin af te hoog gelys was) gesien nie.

Alhoewel die verlaging van rentekoerse die afgelope tyd wel 'n invloed het is dit my mening dat die verandering in die banke se houding oor hul uitleenkriteria die werklike hupstoot vir ons gegee het. Hulle is nou weer bereid om te kyk na 100% lenings en leen dan ook weer geld uit.

Ek glo dit is nou weer tyd om eiendom te koop en glo ook daar juis nou weer winskopies is veral waar die verkopers steeds onder druk is en slegs van die eiendom ontslae wil raak.

Hoe voel julle oor die toekoms van die eiendomsmark en die algemene ekonomiese toestand van ons land en spesifiek ons dorp?

Jacques
www.susstoltz.co.za