Sellers, agents and buyers welcome interest rate cut boost

Lynne Krawchuk, CEO of Under One Roof, says the decision will positively impact the board. “With lower borrowing costs, first-time buyers and investors are more likely to enter the market and expand their property portfolios. Affordable housing areas and regions with high rental yields will likely see a surge in demand,” says Krawchuk.
 
She says now may be the time for hesitant buyers to act. “Competition will likely increase as buyers on the fence rush to take advantage of more favourable lending conditions. For those looking to buy, now may be the best time to secure a property before prices rise again.”
 
Krawchuk points out that the market may soon become more competitive for sellers. “As more buyers enter the market, we could see a flood of new property listings. Sellers should price their homes competitively and ensure their properties are in top condition to stand out in what could quickly become a buyer’s market. For those selling, consult an estate agent for sound advice. Look at the typical sale price of similar properties over the past 6 to 12 months. What have they sold for, and what are they currently being priced at? Your agent will have valuable insights to guide you in pricing your property competitively,” she says.
 
Estate agents are likely to see a welcome shift in momentum. “Agents have been waiting for this news, and it’s likely to breathe life back into the market after months of hesitation.”

Other industry agencies comment;

From Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa:
“This cut will create much welcome relief. This should be a positive step forward for house price appreciation. This cut will likely be the first of an interest rate cutting cycle, hopefully with another cut to be announced in November. Beyond that, it isn’t easy to predict.
 
“The cut will have some bearing on consumer sentiment now, but it will likely only affect decision-making further down the line once the market adjusts to the lower interest rates. The problem with waiting too long is that once most potential buyers decide to invest, demand has already hit higher levels. And when that happens, house prices go up.
 
“If interest rates come down again in November, that would mean that the repayment on the mortgage a buyer negotiates now will be at its highest level. It will almost surely decrease, leaving a buyer with more disposable income or allowing them to pay in more, shorten their loan term and reduce their total repayment on a home loan.”

From Stephen Whitcombe, MD of the Firzt Realty group:

“Most economists agree that it signals the start of a rate-cutting cycle that will last well into next year and may well see the prime rate fall to below 10% – barring any unforeseen global or local disasters that cause a sudden increase in inflation.
 
“For existing homeowners, most of whom have variable-rate home loans, interest rate cuts mean an immediate decline in the minimum monthly repayment. This makes the loan more affordable and reduces the chance of them defaulting and losing their home … it may even allow them to pay off more than the minimum on their home loan each month – a practice which will increase their equity in the property – and could save them many thousands of rands over the life of their home loan.”
 
“For homebuyers, interest rate cuts mean smaller home loan repayments and greater affordability. This means that buyers may be able to purchase a home sooner than they thought, or they may be able to afford a more expensive home than they could at higher interest rates.