Interest Rate Gets Chopped

This information in this article is courtesy of Realestateweb (Mboweni's big chop: what it means for you – 6 February 2009)

South Africa’s interest rate now stands at 11,5%. This comes after the South African Reserve Bank governor, Tito Mboweni, announced that they've shaved a 100 basis points of the previous rate. More good news is that more cuts are expected.

What this really means is that mortgages payers can expect to save R366 on a R500 000 home (20 year term) and R733 on a mortgage of R1m (20 year term).

Although this does not mean the property market has reach the bottom of the cycle, it does show confidence in the market.

According to Saul Greffen, chief executive of mortgage originator Ooba, tight lending criteria continues to be a problem.

"We are hoping that banks will begin to relax their lending policies and this, coupled with home owners' ability to afford more, should begin to revive the property market," he said.

Herschel Jawitz CEO of Jawitz Properties believes our biggest challenge is consumer confidence. According to him confidence will remain low as long as people are concern about job security, making repayments and keeping their heads above water.

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