• Rate Cut Benefits: The 25-basis-point reduction to 11.25 % offers homeowners the chance to reduce debt and save on interest over time.
• Advice for Homeowners: Increase monthly bond repayments or use lump sums to pay off debt faster, reducing overall loan balance and interest.
• Property Market Impact: Lower borrowing costs improve affordability, boosting property ownership opportunities for renters and encouraging investors to expand portfolios.
FINANCE
Understanding the Impact of the Rate Cut The primary reason behind the SARB’ s decision to lower interest rates is to manage inflation and boost consumer confidence.
• Rate Cut Benefits: The 25-basis-point reduction to 11.25 % offers homeowners the chance to reduce debt and save on interest over time.
• Advice for Homeowners: Increase monthly bond repayments or use lump sums to pay off debt faster, reducing overall loan balance and interest.
• Property Market Impact: Lower borrowing costs improve affordability, boosting property ownership opportunities for renters and encouraging investors to expand portfolios.
According to Leonard Kondowe, National Manager at Rawson Finance,“ Inflation has been within the SARB’ s target range, and global market conditions are contributing to cautious optimism.” However, Kondowe also advises caution, noting that the cut aligns with global trends, particularly in the US, where economic conditions have led to lower interest rates.
For homeowners, the immediate effect is a reduction in monthly bond repayments, providing some financial relief. As Kondowe explains,“ While this decrease is relatively small, it has a compound effect over time, especially when used strategically to reduce debt.”
64 REI MAGAZINE DECEMBER 2024 / JANUARY 2025