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Cape Town - The news of the repo rate being on hold is good for home buyers, but should also be of concern to households, analysts said on Thursday.
The SA Reserve Bank (Sarb) announced that the key lending rate will remain at 5.5%.
The unchanged repo rate is good news for aspirant home buyers and those with existing home loans, said Andrew Golding, CEO of the Pam Golding Property group.
“Home buyers continue to be constrained by a variety of cost factors which remain on an upward trajectory, such as fuel and transport, electricity, municipal rates and utilities charges – in other words the costs associated with owning a home - and commuting to the workplace,” said Golding.
He said although criteria for access to credit remain stringent, banks’ appetite for mortgage lending has further improved, with some relief in regard to the average deposit required, and even 100% bonds being granted in certain instances, particularly in the lower end of the market.
"The first quarter of 2014 has reflected a marketplace which demonstrates resurgence in confidence among home buyers, investors and developers alike, resulting in rising sales volumes (unit sales) and capital value, both from a general market as well as Pam Golding Properties perspective,” said Golding.
Further rate hikes will have a potential impact on growth in demand for buying of residential property, according to John Loos
FNB household sector and property startegist
"We expect to see the more non-essential categories of home buying, i.e. for buy-to-let and holiday purposes, remaining subdued, while primary residential buying remains 'king'."
He added that the positive side of a possible containing of residential demand growth is that the interest rate hiking may prevent any “irrational” market from forming.
"Speculation and buyer panic can be instrumental in causing market 'overshoots', and monetary policy can greatly assist in preventing this and keeping the property market in line with what are currently weak economic fundamentals."
Banking reaction
First National Bank (FNB) will maintain its prime lending rate at 9% following Sarb's decision to keep rates on hold until the next meeting of the MPC on 22 May 2014.
“While rates remain unchanged for the next two months, the likelihood of further hikes in 2014 cannot be excluded," said says Jacques Celliers, CEO of FNB.
"I urge consumers to act with care and plan ahead for the remainder of 2014 with the possible impact of higher interest rates in mind."
He pointed out that Sarb has stated that its stance will remain accommodative to enable economic growth.
"However, as inflation rises we expect rates to be adjusted upward. In doing so, the Reserve Bank maintains our effective rates on an even keel,” said Celliers.
Economic uncertainty
Seeff chairperson, Samuel Seeff has reacted to what he regards as too much uncertainty around the economy and in particular where interest rates are heading.
If interest rates are set to go up in the near term, a more decisive indication in terms of the range and probable time frame is imperative, he said.
"Households need to be able to plan and given that the interest rate is such a vital driver of demand, real estate needs a sense of the potential impact if the market is to progress meaningfully."
The SA Reserve Bank (Sarb) announced that the key lending rate will remain at 5.5%.
The unchanged repo rate is good news for aspirant home buyers and those with existing home loans, said Andrew Golding, CEO of the Pam Golding Property group.
“Home buyers continue to be constrained by a variety of cost factors which remain on an upward trajectory, such as fuel and transport, electricity, municipal rates and utilities charges – in other words the costs associated with owning a home - and commuting to the workplace,” said Golding.
He said although criteria for access to credit remain stringent, banks’ appetite for mortgage lending has further improved, with some relief in regard to the average deposit required, and even 100% bonds being granted in certain instances, particularly in the lower end of the market.
"The first quarter of 2014 has reflected a marketplace which demonstrates resurgence in confidence among home buyers, investors and developers alike, resulting in rising sales volumes (unit sales) and capital value, both from a general market as well as Pam Golding Properties perspective,” said Golding.
Further rate hikes will have a potential impact on growth in demand for buying of residential property, according to John Loos
FNB household sector and property startegist
"We expect to see the more non-essential categories of home buying, i.e. for buy-to-let and holiday purposes, remaining subdued, while primary residential buying remains 'king'."
He added that the positive side of a possible containing of residential demand growth is that the interest rate hiking may prevent any “irrational” market from forming.
"Speculation and buyer panic can be instrumental in causing market 'overshoots', and monetary policy can greatly assist in preventing this and keeping the property market in line with what are currently weak economic fundamentals."
Banking reaction
First National Bank (FNB) will maintain its prime lending rate at 9% following Sarb's decision to keep rates on hold until the next meeting of the MPC on 22 May 2014.
“While rates remain unchanged for the next two months, the likelihood of further hikes in 2014 cannot be excluded," said says Jacques Celliers, CEO of FNB.
"I urge consumers to act with care and plan ahead for the remainder of 2014 with the possible impact of higher interest rates in mind."
He pointed out that Sarb has stated that its stance will remain accommodative to enable economic growth.
"However, as inflation rises we expect rates to be adjusted upward. In doing so, the Reserve Bank maintains our effective rates on an even keel,” said Celliers.
Economic uncertainty
Seeff chairperson, Samuel Seeff has reacted to what he regards as too much uncertainty around the economy and in particular where interest rates are heading.
If interest rates are set to go up in the near term, a more decisive indication in terms of the range and probable time frame is imperative, he said.
"Households need to be able to plan and given that the interest rate is such a vital driver of demand, real estate needs a sense of the potential impact if the market is to progress meaningfully."
