The recent 1% interest rate drop means first-time buyers who qualify for the government’s Flisp (Finance Linked Individual Subsidy Programme) can afford more expensive properties, says MDW Inc Attorneys.
On an income of R18 000 per month, a buyer can qualify for R41 750 more finance with the new prime interest rate of 8.75%, compared to the previous 9.75% interest rate.
The affordability ceiling of a first-time buyer who qualifies for this subsidy has increased from the previous average home loan amount of R680 000 to a value of up to R870 000, it states.
“This may change the property industry for first-time buyers and property sellers.”
Furthermore, banks are competing for business and some have increased the repayment-to-income ratio from 30% to 35%, says MDW’s Meyer de Waal.