Today's decision by the Reserve Bank's Monetary Policy Committee to drop the repo rate by 0.25 basis points to 7% will give South Africans good reason to be optimistic despite the gathering storm clouds ahead of tomorrow's expected imposition of tariffs by American President Donald Trump.
Tyson Properties CEO, Chris Tyson, welcomed the drop in the repo rate amidst the lingering uncertainty about the actual impact of ongoing geopolitical conflict and tensions on the local economy. It is the first since May this year.
"There is always the risk that we remain so focussed on the ongoing negatives that we fail to see the many positives. We should not forget that the current interest rate environment continues to offer both those entering the property market and those who are repaying loans on properties the best borrowing conditions in years," he said.
Tyson Properties Director, Francois du Toit, agrees that this small interest rate cut will not only help people to feel more positive but to keep the property market on the path to recovery: "Whilst the Cape Town market continues to boom, the KwaZulu-Natal market is holding firm. Johannesburg is seeing a slow but consistent recovery."
Taking a longer-term view, he notes that households across the world are likely to remain under pressure. He says the new 'worldwide norm' is for people to be more mindful of their budgets.
Although the Reserve Bank has held back on interest rate decreases since May, its latest move, which brings the prime lending rate down to 10.5% will put only a small amount back into the pockets of cash strapped households. Because this is likely to mark the end of the rate cut cycle, Tyson believes it is now up to homeowners to tighten their purse strings in order to plug budget leaks and bring disposable income back to acceptable levels.
His eight tips to help South African homeowners remain economically resilient are: