The cycle of interest rate hikes continues following the latest announcement by the Monetary Policy Committee (MPC). The repo rate climbs by 50 basis points to 4.75%, leaving the prime lending rate at 8.25%.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that this decision was predictable and in line with other statements provided by the MPC. “My hope is that homeowners have planned for these interest rate hikes and have already made room in their budgets to afford the slightly higher debt repayments,” he comments.
Knowing that more interest rate hikes are forecasted for the year ahead, the question of whether to fix the interest rate on a home loan has come up more and more frequently. “The truth is that there are so many unknown variables around interest rate fluctuations that it is impossible to tell with absolute certainty whether fixing your interest rate now will be more beneficial for you in the long run,” says Goslett.
Rising interest rates also pose challenges for real estate agents, as buyers are becoming more hesitant to purchase while interest rates are still climbing. “My advice to real estate practitioners at this time is to remind buyers that prime was at 10% pre-COVID, which means that interest rates are still at record lows despite these interest rate hikes,” he advises.
For buyers who are still concerned about the rising interest rates, Goslett suggests that real estate agents put their clients in touch with a bond origination service, such as BetterBond, not only to help buyers perform affordability calculations at higher interest rates to put their minds at ease, but also to help them get the best possible deal on their home loan.
“I do expect that buyer activity will take a knock following this latest hike, but the demand for homes priced at fair market value should not be negatively affected following this latest announcement. This is where pricing a home correctly becomes so much more important. Sellers should lean on the advice of reliable real estate professionals to make sure they price the home correctly during this time,” he concludes.
