The Monetary Policy Committee (MPC) announced today that the repo rate will climb by a further 75 basis points to 7%, leaving the prime lending rate at 10.5%.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett says that these interest rate hikes are to be expected, especially considering the global trends that are emerging. “With interest rates and inflation rising across the world, it could be expected that the MPC would increase rates in response to the global uncertainty. This is why we have been encouraging homeowners for a while now to reduce their debt levels, as affordability will become an increasing concern for the homeowner over time.”

“The effects of these interest rate hikes only become evident a few months after consumers adjust to paying the higher debt instalments; but, we have already started seeing the signs that property market activity is shifting. Over the last two months, our digital marketing agency has noted a rise in rental-related search terms and a decline in buying search terms, which points to a coming shift in the local housing market,” he notes.

He advises real estate agents to start preparing themselves for leaner times. “Since COVID, we have had an abundance of buyers. This is likely to change now, so real estate professionals will need to build out their networks as much as they can before conditions change,” he recommends.    

However, Goslett also highlights that interest rates are roughly back to where they were before COVID and are not yet at abnormally high levels. “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. Many economists predict that our GDP is likely to shrink in 2023, which could put further pressure on individuals. Reducing debt now will make any future interest rate hikes more bearable,” Goslett concludes.