The Monetary Policy Committee (MPC) is set to make their interest rate announcement again on 23 November. Most economists predict that interest rates will be raised by yet another 0.25% which would bring the prime lending rate up to 12%.
The interest rate hiking cycle was paused at their last meeting in September and many remained hopeful that, that would mark the end of the cycle. However, after inflation increased to 5,4% in September from 4,8% in August, most have since changed their predictions and are expecting interest rates to climb in November.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that if interest rates do rise, this will put some strain on the property market. “As things stand, many homeowners are struggling to keep up with the repayments on their home loans and our distressed property department has never been busier,” he notes.
The property market as a whole has experienced a decrease in the number of transactions. According to the RE/MAX Q3 20223 National Housing Report, the national total is down by 20% YoY. “With every interest rate hike, fewer buyers are able to afford the rising cost of home finance, which automatically decreases the potential buyer pool and lessens that demand for property,” he explains.
Seeing that it would be wishful thinking to hope for an interest rate cut at the November meeting, Goslett says that the best possible outcome for the next meeting would be if the MPC were to decide to hold interest rates steady, as this would allow the market some more time to find ways to manage their debts and cope with the higher repayments.
“As much as I hope that interest rates will hold steady, it is still likely that they will increase at the November meeting. My advice to those who are already struggling to make ends meet is to carefully review your budgets ahead of the next MPC meeting and to find qualified help if you are feeling like you are in over your head,” Goslett concludes.
