PROPERTY NEWS - One of the big four banks, Absa says it will keep the prime rate at 9 percent.
Absa says unchanged interest rates will give support to the economy, homeowners and would-be home buyers.
The bank says unchanged interest rates will give support to the economy, homeowners and would-be home buyers. Steady interest rates will also benefit the affordability of housing and mortgage finance.
The South African Reserve Bank’s Monetary Policy Committee (MPC) has left the repo rate unchanged at 5,5 percent amid global economic concerns.
Absa Retail Bank CEO, Gavin Opperman, says that with inflation creeping up, low interest rates will benefit debt repayments by consumers.
Opperman says the ratio of household debt to disposable income dropped to 75,9 percent in Q2 2011 from 76,8 percent in first quarter.
The lower debt ratio and low interest rates have resulted in the cost of servicing household debt dropping markedly over the past two and a half years, he says.
He warned that consumers should not drop their guard.
They have to live and spend within their means as inflation is rising, thereby impacting their purchasing power.
The volume of customers entering debt counselling has declined significantly over the past year and has stabilised over the last quarter.
Homeowners who have defaulted on their monthly bond repayments and are in financial distress are encouraged to contact the bank for solutions that may assist them to hang onto their homes.
Estate agents have welcomed the announcement saying house prices continue to reflect strains of a recovering buyers' market.
Demand has increased and consumer confidence has remained fairly steady in the first three quarters of 2011.
Dr Andrew Golding, chief executive officer of the Pam Golding Property (PGP) Group says "We expect that interest rates will remain at relatively low levels for the foreseeable future, providing some measure of certainty to the cost of debt," says Golding.
Despite the fact that the South African housing market remains muted, it continues to demonstrate resilience, he says.