South African homeowners can expect another interest rate hike of 0.5% or more. The country waits in anticipation ahead of the next rate announcement which is set to be held on 22 September at 3pm.
The interest rate was increased by 75 basis points in July, increasing the rate to 7.8% in July from 7.4% in June.
Regional director and chief executive of RE/MAX, Adrian Goslett predicts that interest rates will increase again, saying, “To combat rising inflation, we are likely to experience another big increase from the Monetary Policy Committee (MPC) in September, possibly somewhere between 50 basis points to a full percentage increase.”
We can expect the interest rate to go back to the pre-COVID-19 rate of 10% (prime). This interest rate hike is more likely to affect first-time home buyers that have purchased their property when the interest rates were at an all-time low. The more established homeowners that have bought their property before the pandemic and at a time when the interest rate was at prime, should be more used to the fact that interest rates change all the time.
Goslett said, “My concern is around the many first-time home buyers who entered the market when interest rates were at an all-time low and who might be unfamiliar with the fact that interest rates change often over the span of a twenty-year loan term.
“For these kinds of homeowners, I would encourage them to do the necessary repayment calculations ahead of the next MPC meeting to make sure they can afford the higher repayments,” concluded Goslett.