Ongoing record-low interest rate bolsters property market confidence

30 Sep 2021

Faced with recent setbacks to the economic recovery and with inflation hovering close to the mid-point range of the inflation target, as widely anticipated, the Monetary Policy Committee's stance remains supportive of the economy by keeping the repo rate at near five-decade lows (3.5%). This means the prime interest rate holds steady at 7%.

Given the underlying weakness and uneven recovery in the economy, market commentators ahead of the recent announcement included a call for the first hike to be delayed for as long as possible - even until 2023, depending on inflationary pressures and any potential shift in the inflation target.

From a housing perspective, the prevailing low interest rates have undoubtedly bolstered market confidence, coupled with favourable lending conditions seeing both average (trailing effective) and first-time buyer approval rates rising further in August (2021), increasing to 82.6% and 81.2% respectively, according to Ooba.

Moreover, after increasing in Q4 2020 and Q1 2021, deposits as a percentage of purchase price are again declining, with average and first-time home buyer deposit rates converging at around 7% in August, while the overall approval rate for 100% home loans rose marginally in the same month to 82.8%. (Source: Ooba)

Moreover, after increasing in Q4 2020 and Q1 2021, deposits as a percentage of purchase price are again declining, with average and first-time home buyer deposit rates converging at around 7% in August, while the overall approval rate for 100% home loans rose marginally in the same month to 82.8%. (Source: Ooba)

Article published courtesy of BIZCommunity


Go Back to News Main Page