The Reserve Bank has elected to slash interest rates by 25 basis points. This means a new repo rate of 6.5% and prime lending rate of 10%.
This decision brings about good news for consumers and property owners as it offers a bit of relief after experiencing extreme pressure on their household budgets, especially since fuel prices, municipal rates and tariffs and taxes are taking a big bite out of disposable income across the board. The economy also gets a much needed boost as consumers will be encouraged to spend a bit more and as a result increase the demand and production of consumer goods while increasing chances of job creation.
Tony Clarke, Managing Director for the Rawson Property Group, urges consumers to continue with paying down their debts as fast as possible, while taking on new debt still needs to be handled conservatively. “This is a favourable time for consumers to boost their savings as much as they can especially if they are planning to buy a home,” says Clarke. “This will go a long way towards minimising the effect any future interest rate increases will have on the security of consumers’ property investments and help new purchasers cover their necessary fees and deposits, despite tight financial times.”
Clarke says, from a property market perspective, to expect a slow and steady improvement in price growth and a continued boost in buyer confidence. “This time will also present a valuable opportunity for buyers and investors to secure sound medium to long term investments at good value.”