Interest rates need to be cut by one percent immediately to help already overburdened consumers, kick start the stricken property market and restore consumer confidence, ooba (formerly MortgageSA) said on Monday in a statement.

Stef Fourie, managing executive of property finance at ooba said the country should follow the international lead and cut rates at the next monetary policy meeting in December.

"South Africa has been successfully growing a middle class which is becoming the backbone of the economy," said Fourie.

"But high interest rates are threatening to undermine our progress because of the onerous debt servicing burden.

He said that consumers were "struggling" and clearly needed help.

"Rates need to be cut one percent to stave off further pain and ensure as many South Africans as possible can keep their homes, a primary source of wealth creation and many people's biggest investment."

Many countries around the world including Australia, Canada, China, Sweden and Switzerland had recently cut interest rates.

The UK has cut interest rates to a 53 year low of three percent, US interest rates have been slashed to one percent and Japan cut its interests rates for the first time in seven years.

"Globally the rate cycle has turned and to keep rates high in the face of an international economic meltdown is not the right tack for South Africa.

"There are signs everywhere that consumers are already very distressed, with consumer confidence at an all time low."

Fourie said car sales had dropped, consumer credit extension had fallen sharply and house sales volumes were down by around 50 percent.

The most recent "oobarometer" showed a 6.6 percent year-on-year drop in house prices.
"While cutting interest rates may not solve all of the South African consumer's financial problems, it will go a long way to restore consumer confidence and breathe life into the faltering housing market."