The decision was announced by Reserve Bank Governor Lesetja Kganyago and was widely expected, despite the June rise in the headline inflation rate to 6,3% from 6,1% in May. “Economists say the most pressing issue for the MPC at the moment is low economic growth and the real danger that SA could tip into recession before the end of the year – note the fact that inflation is running at slightly above the MPC’s 6% ceiling,” says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator. “With growth now projected to hit 0% in 2016, unemployment on the rise and a ratings downgrade quite possible at the end of the year, an interest rate increase to try to reduce inflation by curbing consumer spending at this stage would not have been wise.” What is more, he says, most South African households are not actually spending excessively. Rather, they are struggling to make ends meet as a result of the high food prices induced by the drought, electricity and other tariff increases this year, and higher debt repayments as a result of the two interest rate increases imposed earlier this year. As a result, this week’s decision is good news for both homeowners and homebuyers. “It means that the monthly repayment on a home loan of R 800 000 obtained at an interest rate of 10,5% will remain at just under R 8000 – and that will give existing homeowners some comfort. “It also means that there will be no increase for now in car instalments, credit and store card repayments or other debt commitments, which will give prospective buyers a little more time to qualify for a home loan at their current income levels. “And even tenants will benefit because their landlords will now not need to increase rentals to cover their own higher bond repayments.” However, Rademeyer cautions, the banks can be expected to continue to follow very strict credit granting criteria, so prospective buyers should be sure to apply for their loans through a reputable mortgage originator like BetterLife Home Loans, which is prepared to motivate and caretake individual applications, and can advise them as to the most suitable home loan options for their individual financial circumstances. “The advantage in following this course is very clear from the fact that we are currently able to obtain approval for three out of every four home loan applications we submit, as opposed to a success rate of less than 40% in the open market.”