The Monetary Policy Committee is set to meet again and deliver its decision around interest rate policy on 24 November. Experts predict another hike is to be expected.
“My prediction is that there will be another interest rate hike, probably not as severe as previous hikes, but somewhere between 0,25% or maybe 0,5%, because the South African Reserve Bank [SARB] will most likely still be trying to curb rising inflation,” says Adrian Goslett, Regional Director and CEO of RE/MAX Southern Africa.
If so, he says affordability will then become a concern for the homeowner.
“It will become more difficult to service loans as interest rates climb, which is why we’ve been encouraging homeowners for a while now to reduce their debt levels to be able to accommodate this.”
Rising interest rates make buying or selling a home more difficult and decreasing interest rates make buying and selling easier. As interest rates increase, affordability decreases.
Also a big concern, says Goslett, is if you look ahead to next year and you take into consideration what many economists are predicting. “South Africa’s GDP is probably going to shrink slightly in 2023 and if that happens, this will impact unemployment rates and put greater pressure on tax-paying citizens above and beyond the increasing interest rates.
Says Goslett: “While interest rates are still manageable at this point in time, I recommend that all homeowners make sure to put themselves in a position to be able to afford the higher repayments on the home loan as well as other debts they might hold.
“This will ensure that they are in a good position if, as many economists predict, we head into leaner times in the year ahead.”
