STABLE INTEREST RATES GIVE HOMEOWNERS ANOTHER BREAK
Interest rates will yet again remain stable at 3.5% (repo rate), with the prime lending rate remaining at 7% following the September announcement by the Monetary Policy Committee (MPC).
While grateful for this decision, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, remains cautious for when interest rates will begin their inevitable upward climb. As predicted in his response to the interest rate announcement back in January this year, Goslett stated that it was unlikely that we would see interest rates climb this year but still advised homeowners to leave room in their budget for a possible increase.
“It is no secret that SARB governor Lesetja Kganyago hopes for the inflation target to be lowered to 3% over time and at every MPC meeting thus far, upcoming interest rate hikes have been mentioned. I would caution homeowners and new buyers to take these warnings seriously and make sure there is provision within their budgets to allow for an increase of at least 25 basis points at any point in time,” Goslett cautions.
As things stand, keeping interest rates stable will go a long way towards helping debt holders keep up with repayments within an already struggling economy. “Unemployment rates are at an all-time high. Unless things start to change and the economy is allowed to open up further, this does not bode well for the local housing market. Rising unemployment often leads to an increase in the number of repossessed homes and an increase in the number of homeowners who are forced to downscale. In time, this will then have a negative impact on housing values,” Goslett explains.
That being said, the property market continues to be incredibly active and is performing better than expected ever since COVID hit last year. “This speaks into the reality that, no matter how badly the economy performs, people will always need a place to live. I am not sure if and when the property market will become less active and take a turn for the worse, but what I am sure of is that those who view owning a home as a long-term investment will inevitably enjoy good returns if they have made smart investment choices. Those who hope to make these smart investment choices should seek the advice of their nearest RE/MAX agent who can keep them up-to-date on the latest market conditions and any new opportunities as and when they arise,” he concludes.