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Repo rate cut support

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This month's repo rate cut is not expected to have a meaningful impact on the demand for property, but will still be an important source of support for the property market, says FNB economist John Loos.

In the current deep recession, with business confidence at multi-decade lows, the support from the cuts in interest rates comes in the form of financial relief for current property owners, which can be important in curbing the extent of growth in property supply on the market, by slowing the rate by businesses of financial pressure-related property selling.

The South African Reserve Bank’s most recent 50 basis point interest-rate cut brought the cumulative repo rate from 4.25% to 3.75% and the prime lending rate from 7.75% to 7.25%.

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