ooba welcomes latest rate cut

ooba welcomes latest rate cut

ooba (formerly MortgageSA) welcomed the second interest rate cut of 1% in the current interest rate cycle announced today by the South African Reserve Bank.

The latest 1% cut in interest rates will save home owners R730 a month on a R1m homeloan over a 20 year period.

The 0.5% rate cut in December has already saved South African home owners an estimated R259m in home loan repayments each month and the latest rate cut brings that figure to an estimated R770m monthly savings.

"The decision by the Reserve Bank to cut interest rates by a further 1% is a welcome relief for all of South Africa¿s property owners," says Saul Geffen, chief executive of ooba (formerly MortgageSA).

The South African property market has experienced a marked slow-down from the beginning of 2008 due to a combination of factors including high interest rates, the introduction of the National Credit Act and tighter lending policies by the banks.

The decrease in interest rates as well as the lower petrol price should give consumers something to smile about.

The high cost of debt has been blamed for many home owners defaulting on their bond payments and for some; losing their homes entirely.

Geffen notes that banks' recent tightening up of lending has compounded the troubles in the housing market.

"We are hoping that banks will begin to relax their lending policies and this, coupled with home owners' ability to afford more, should begin to revive the property market," notes Geffen.

ooba recently found that home owners have been opting to keep their mortgage rates at the old level which means that they are paying off their home loans quicker and saving themselves thousands of rands in interest.

"This shows that home owners are becoming more financially savvy when it comes to their money and bonds," says Geffen.

While further rate cuts are needed to make a substantial difference in property owner's repayments it does signify a downward trend that will hopefully continue far into 2009.

Savings

Bond amount of R350 000 - R256 per month saving with 1% interest rate cut

Bond amount of R500 000 - R365 per month saving with 1% interest rate cut

Bond amount of R1 000 000 - R730 per month saving with 1% interest rate cut

Hello ooba news

The latest oobarometer stats reveal that the average purchase price growth among first-time buyers remains strong at 12.1% in June. This, together with the continued easing in lending criteria, is good news for potential homebuyers in South Africa.

With the property market beginning to show signs of a recovery, it is more important than ever to ensure your home is correctly priced. Jenny Rushin, property finance manager at ooba, SA's leading mortgage originator, said that a property listed at the right price will give sellers the greatest chance of attracting buyers.

South African banks have loosened their lending criteria which has supported a revival in the property market and helped new buyers enter the market says South Africa's leading mortgage originator, ooba.

South Africa's leading bond origination company, ooba, has seen a 55% increase in the value of approved loans from April to September this year, with a 21% surge from August to September alone.

With house price indicators like the oobarometer perking up, smart buyers are slowly returning to the market and need to be armed with how to make the best purchase possible. Ben Seymour-Brown, manager of group direct sales at ooba, said: "We expect more people to return to the property market this year and certainly next as the economy recovers, the effect of lower interest rates is felt and confidence returns to bricks and mortar investment.