HOMEOWNERS ENJOY ANOTHER QUARTER OF STABLE INTEREST RATES
As predicted, the Monetary Policy Committee (MPC) announced today that interest rates will remain unchanged until their next meeting in July. The prime lending rate therefore remains at 10.25% and the repo rate at 6.75%.
“The decision to keep interest rates stable was a predictable move by the MPC. With it being less than a month since the national elections were held, it is understandable to adopt a wait-and-see approach before lowering or hiking interest rates,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
That being said, the MPC almost allowed for an interest rate cut at this meeting. “If inflation rates continue to be within the MPC’s target point, homeowners can expect an interest rate cut at the next meeting. However, should negative risks push inflation beyond this mid-point of the target range of between 3% and 6%, the MPC has warned that interest rates will increase to moderate inflation. Homeowners are therefore advised to enjoy these next few months of stable interest rates while paying close attention to inflation rate announcements to prepare themselves ahead of the next interest rate announcement scheduled to be made on 18 July,” Goslett advises.
“In terms of what this decision means for the housing market, it is likely to allow the opportunity for market activity to pick up post-elections. We therefore remain optimistic for long-term house price growth. On the other hand, the slowed rate of rental inflation we have been experiencing over the last year has had the positive effect of subduing the overall inflation rate. Should rental prices inflate along with property prices, interest rate hikes will also become more probable in the future,” Goslett explains.
Goslett therefore encourages existing tenants and first-time buyers to enter the property market now before prices escalate. “The gap is closing for buyers to get a good deal on real estate. For those who are able to afford it, there truly has not been a better time to invest in property than right now,” Goslett concludes.