While it was expected that Monetary Policy Committee would keep interest rates at their current levels and looking at the state of the South African economy today (with its low Rand and higher inflation rate), this course is almost certainly the wisest to follow. However, the South African property sector would nevertheless have welcomed another interest rate cut, says Bill Rawson, Chairman of the Rawson Property Group.
“We have got ourselves into a predicament where the wisdom of property ownership is now understood by a wider section of the South African population than ever before, but where the means to become property owners - i.e. mortgage bond loans – are scarce in relation to the demand for them. The challenge facing five buyers out of ten today is to meet the banks’ profiling systems.”
The banks, says Rawson, have repeatedly pointed to the unacceptable levels of bad debt that at one stage were run up as the reason for having to be ultra-careful in awarding bonds. It is therefore understandable that they should favour the clients with whom they have already established relationships and from whom they can make money in other ways, apart from bonds.
“Nevertheless,” he says, “the property sector is still inclined to feel that the call for home ownership is so strong that there must be other ways of meeting the need without incurring big risks.”
“Perhaps,” says Rawson, “it is time for the banks, the property sector and the state to get together to discuss this matter. Without wishing to appear naïve and over-critical, the feeling in this sector remains that all the possible solutions to the current impasse have not been fully explored.”
