Home loans are getting more expensive with the latest interest rate hike
We start the year with the second tranche of interest rate hikes following the latest announcement by the Monetary Policy Committee (MPC) to raise the repo rate by 25 basis points to 4%, leaving the prime rate at 7 .5%.
Although aware that a cycle of interest rate hikes was likely to be in store for 2022, RE/MAX Southern Africa Regional Director and CEO Adrian Goslett hoped interest rate hikes could occur more gradually over the year.
“Each time interest rates go up, home loans become a bit more expensive. This can affect activity in the housing market, as fewer people will be able to afford the repayments at the higher interest rate. “, did he declare.
“Over time, this could mean smaller pools of buyers and downward pressure on asking prices, especially if more homes enter the market due to affordability concerns.”
Goslett added that the more interest rates gradually climb, the less effect it will have on the housing market as a whole.
“Had interest rates held steady after the last interest rate hike in November, the MPC would have given homeowners and buyers time to adjust to the higher repayments they were facing on their home loans and other debt repayments,” he said.
“This second consecutive interest rate hike is likely to dampen buyer demand and could also put many homeowners under pressure to keep up with their home loans.”
As for the outlook for the rest of the year, Goslett remained cautiously optimistic for all that lies ahead.
“The real estate market has experienced two years of hyperactivity despite the economic difficulties that we have faced. While it is likely that we will see activity decline this year with any rise in interest rates, the South African property market is resilient and demand for housing will always exist in one form or another,” he said. -he declares.
“The key to generating good returns on your real estate investments is to stay informed of local market conditions by seeking the advice of a trusted real estate professional.”