INTEREST RATES CLIMB AS EXPECTED

Homeowners will have to adjust to higher home loan repayments following the latest announcement by the Monetary Policy Committee (MPC). The repo rate climbs by another 75 basis points to 6.25%, leaving the prime lending rate at 9.75%. 

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett says that the impact of these interest rate hikes might only be felt next year, especially if interest rates continue to climb at the next few announcements.

“Property market activity is still unusually high even after the last interest rate hike; so much so that many parts of the country are experiencing a seller’s market where demand far outweighs supply. This is possibly because interest rates are still lower than pre-pandemic levels of around 10%. It is possible that the effects of these interest rate hikes might only be felt after homeowners have had a few months of paying the higher debt instalments,” he notes.

Following this announcement, Goslett encourages real estate professionals to check that their potential buyers are aware of how the new interest rates will affect the repayments on the home loan they are hoping to qualify for. “Buyers might be able to afford less than they realise after factoring in the new repayment amount, so it would be good for real estate professionals to confirm this with their buyers beforehand,” he recommends.

As a final word of advice, Goslett cautions homeowners to keep on top of their expenses to make sure they do not fall behind on the higher debt repayments in the coming months.

“Inflation is eating into many households’ disposable income levels, which, paired with the higher instalments on any debt repayments, could lead to financial difficulties over time, especially if interest rates continue to climb. Before getting to this point, homeowners should look for ways to cut back on expenses and possibly even reach out to a local RE/MAX agent to explore the option of downscaling if it will provide them with greater financial security,” he concludes.