Reserve Bank’s next move could be the boost your bond has been waiting for

Homeowners and aspiring buyers are looking forward to the Monetary Policy Committee (MPC) meeting this week, which could bring positive changes to the lending landscape. With a strengthening rand and inflation nearing target levels, the potential for a drop in the prime lending rate is on the table.

Impact of Previous Rate Cuts

Since November last year, multiple interest rate cuts have reduced the rate by 125 basis points, leading to a more favourable lending environment. This has significantly decreased monthly bond repayments, with homeowners paying over R1,000 less on a R2 million bond compared to last year.

Experts Divided on Future Rate Cuts

Opinions among experts vary regarding the timing of further reductions to the prime lending rate. Some anticipate a drop by the end of 2025, while others suggest waiting until early 2026 for inflation to stabilise.

Stability in the Housing Market

Regardless of the MPC's decision on 20 November, the housing market is currently stable. Recent data indicates a narrowing range in the buyers’ market, signalling improving confidence and increased activity among prospective homeowners.

Boost in Investor Confidence

The removal from the Financial Action Task Force (FATF) grey list is expected to further enhance investor confidence. This, coupled with the potential for another rate cut, may positively influence the strength of the rand.

Opportune Time for Buyers

Bradd Bendall from BetterBond highlights that now is an advantageous time for aspiring buyers to enter the housing market. With the prime lending rate being comparatively low and an increase in home loan applications, first-time buyers are finding it easier to navigate the market.

Decreased Average Deposits for First-Time Buyers

A recent report shows a 21% drop in the average deposit required for first-time buyers compared to a year ago. Encouragingly, these buyers represented 30% of all transactions in the third quarter of this year, up from 26% in the previous quarter.

Record House Price Inflation

House price inflation has reached a new high, crossing the R1.6 million mark for all buyers, while first-time buyers are looking at an average of R1.3 million. The property market has seen an increase of 10.7% in average home prices over the past six years, underscoring the long-term value of property as an investment.

Resilience Amid Economic Uncertainty

The property market is showing promising growth despite ongoing global economic concerns. Factors such as lower inflation, a stronger rand, and renewed lending confidence create ideal conditions for homeowners and first-time buyers to capitalise on current market momentum.

Positive Outlook for Year-End

Bendall concludes that all signs indicate a robust conclusion to the year for the property market. With a solid foundation laid, both homeowners and aspirant buyers can expect sustained growth into 2026, regardless of the MPC's upcoming decision.

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