To the disappointment of all debt holders, the Monetary Policy Committee (MPC) announced at their latest meeting that interest rates will remain unchanged at 7.5% (repo rate) and the prime lending rate at 11%.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, feels that it was a missed opportunity for the SARB not to cut interest rates at this meeting.
“While I acknowledge the risks to our inflation expectations, I still think that the SARB acted too cautiously. A rate cut would have provided much-needed relief to consumers who might be facing increased financial strain due to key decisions announced in the Budget Speech. An interest rate cut at this time could have offset some of this potential strain and create greater opportunity for economic growth – which is something our country desperately needs,” he comments.
Speaking to real estate agents, Goslett highlights that following the Budget Speech and this announcement, affordability will remain a top concern for most buyers. “My advice is that agents should offer more support during this time, putting buyers in touch with a bond originator or recommending a financial advisor to help them fully understand what they can afford within this market,” he recommends.
Looking ahead, RE/MAX of Southern Africa encourages both buyers and sellers to stay informed about economic trends that could impact the real estate sector. “Future decisions by the SARB will depend on inflation trends and global economic conditions – both of which are facing significant upside risks that could lead to the Reserve Bank maintaining its tight stance on interest rates going forward,” says Goslett.
While interest rate hikes are not forecasted for the year, the chance for further interest rate cuts is unlikely. “Those who are already in the market or are hoping to get into the property market should work closely with real estate professionals to make informed decisions as and when market conditions change,” Goslett concludes.
