‘Strong likelihood’ of further rate cut

2010-09-01 10:02

There is a strong likelihood of a 50 basis points rate cut when the SA Reserve Bank’s (SARB) Monetary Policy Committee (MPC) meets next week, estate agency group Seeff has said.

The recent announcement that the inflation rate was at 3.7% was “very promising”, Seeff said in a statement.

At an inflation rate of this level – rather than the anticipated 4% – there was a strong likelihood of a further 50 basis points interest rate cut, which would bring the prime rate down to 9.5%, said chairperson Samuel Seeff.

“We are really at the lowest interest rate for over 30 years. I can’t see anything fundamental changing significantly between now and the next MPC meeting so I see an interest rate cut as very likely.”

Seeff said a cut would be “a real psychological boost for the market” and provide impetus for buyers to make a move.

“The buyers are still in the pound seats, which largely comes from sellers still wanting 2007 prices – pre-National Credit Act prices – and the truth is, if they are wanting those prices, they are going to have to wait a while.”

However, if a seller had his property on the market at the right price, there were enough buyers out there for transactions to happen.

“Banks are currently only approving 15% of applications for 100% loans, but they are coming back and making offers to clients, for example asking for a 5% deposit.”

Those buyers who had at least a five percent deposit in hand were more likely to have their bond applications approved.

“I think the market will be better in September than in August as the start of Spring gets people looking at their plans for the rest of the year,” he said.

Seeff predicted that South Africa would have “a bit of a stronger summer than we have had for the last two years,” on the back of all the positive sentiment that came out of the World Cup, the completed infrastructure and the low interest rates.

“Generally, we are all realising here in South Africa that we may have issues which challenge us every day, but certainly the rest of the world has greater economic challenges, and our house market is likely to out-perform most.”

Turnover, if not house prices, would increase in the next few months according to the usual seasonal patterns, Seeff said.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.