Repo rate cut by 50 bps to 3,75%
The anticipated repo rate drop has been announced by the SARB Monetary Policy Committee. This drop takes the South African prime interest rate to its lowest since the 1970s.
Some South Africans may feel a little financial relief from this rate cut as financial burdens grow with the continued Covid-19 lockdown. This year, the Governor of the Reserve Bank, Lesetja Kganyago has facilitated interest rate cuts by 225 basis points and, more cuts may be considered to help to stimulate the economy that has been hindered by a recession since 2019.
The cut of 50 basis points (0.50%) means that the repo rate is now 3.75% and the bank prime interest rate will drop to 7.25%. The repo rate is the benchmark rate used by the Reserve Bank to lend money to national banks.
Many economic commentators are suggesting that further rate cuts should be applied to counteract the inflationary stress felt from sluggish national and global growth. Internationally, banks have adopted an aggressive approach to shore up liquidity while their economies are limited by their lockdown measures and growth and stimulus programs are vital for post-lockdown. “All role players in the real estate industry are anxious to resume their activities, with real estate agents still limited and confined to Alert Level 2.” says Sandy Walsh, MD Property.CoZa SA, “There has been no response from the National Command Council to the many appeals from our industry to allow estate agents to resume their activities now, on Level 4, and these past eight weeks in lockdown have taken their toll on our industry.”
The Deeds Office opened on 13 May and not 4 May as expected, operating with limited staff and little progress. On 19 May the Deeds Office in Cape Town suspended lodgements indefinitely due to issues with unions, raising more concerns although registrations can still take place.