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HOMEOWNERS are the biggest winners after yesterday's surprise 50-basis point interest rate cut by the Reserve Bank.
The bank unexpectedly cut its repo rate to 6,5percent to help accelerate a recovery from last year's recession.
Commercial banks Standard Bank, First National Bank, Nedbank and Absa all announced they would cut their prime lending rates by 0,5percent from 10,5percent to 10percent.
A homeowner with a R1million bond on prime can expect a saving of R333,58 on their payments from R9983,80 to R9650,22, according to Absa's bond calculator.
Absa's property analyst Jacques du Toit yesterday said a R1million bond "can be regarded as a middle-segment property".
According to Absa's property index, middle-segment homes now average between R950000 and R960000.
Yesterday's move adds to 5percentage points of reductions between December 2008 and August 2009 to boost growth after weak local and global demand hit the key manufacturing and mining sectors.
Economists called it wrong last week with 19 of 22 economists polled by Reuters expecting the Reserve Bank to keep the repo rate at 7percent, while only three forecast a 50-basis points cut.
While the business community and analysts welcomed the rate cut as the right move, Cosatu said it was "too little too late".
"Though this is too little too late, we hope that it is a turning point and that the Reserve Bank has finally listened to the debate in the ANC, Cosatu and civil society and accepted the overwhelming argument that monetary policy must be guided by a mandate to promote economic growth and job creation, and not just to control inflation," Cosatu said in a statement.
Labour union have long-clamoured for more cuts, saying domestic rates are still relatively high, making life hard for debt-ridden South Africans.
Finance Minister Pravin Gordhan sent Reserve Bank governor Gill Marcus a letter last month to stress the policy committee had leeway to focus more on growth and jobs.
Business Unity South Africa (Busa) said the cut was "the right move in current economic circumstances".
"This step will help to strengthen business and consumer confidence, and will especially assist small business," Busa said.
The SA Chamber of Commerce and Industry (Sacci) believes that the lower rate will assist its members, particularly SMMEs, who are still vulnerable despite the hesitant recovery of the country from the recent global economic downturn.
"This clearly demonstrates an awareness of the need to stimulate the economy despite the threats to the inflation associated in the main with increases in administered prices," Sacci said in a statement.