News

Interest rate increase of 25 basis points

Private Property South Africa
Press |
Interest rate increase of 25 basis points

Remaining on its rate-hiking phase, the Reserve Bank has once again announced at today’s Monetary Policy Committee meeting that the interest rates would increase by a further 25 basis points. This brings the repo rate to 6.25% and the prime lending rate to 9.75%.

The decision to raise the rates has been on the cards for some time, with current economic conditions leaving the Reserve Bank little choice.

With the US dollar strengthening over the rand in the last two weeks and the US Federal Reserve expected to raise its rates at their next meeting, economists had predicted that the South African Reserve Bank would follow suit and hike rates by at least 25 basis points. Concerns that the weakness of the rand would impact on inflation had economists expecting that the Reserve Bank would raise the rates to counteract the effects. However, while a higher rate could mitigate the inflation pressure, an excessive rate would slow economic growth and place more pressure on prospective property buyers and homeowners.

The Reserve Bank had to address the current economic conditions that the market is facing at the moment, however it will be a balancing act to try and counteract inflation pressure while not stunting growth. It is expected that there will definitely be further rate increases during the course of 2016. Prospective property buyers, along with those who currently own property should prepare for this by tightening the reigns on their spending habits and building a savings reserve. While those with high debt levels will be adversely impacted by a hiking cycle, those who have savings in place will benefit greatly.

It is important for consumers to bring down their debt levels and place themselves in the most optimum financial position they can, before the next Monetary Committee meeting.

Comment on interest rate announcement. Adrian Goslett, CEO of RE/MAX of Southern Africa.

Related Articles

How the interest rate impacts the property market
Press | 27 Jan 2017

How the interest rate impacts the property market

South Africans breathed a sigh of relief when the South African Reserve Bank kept the repo rate at 7% this month.

Rate increases by 25 basis points
Press | 18 Mar 2016

Rate increases by 25 basis points

As expected, the Reserve Bank has announced another rate hike at today’s Monetary Policy Committee meeting, bringing the benchmark repo rate up to 7% and the prime lending to 10.50%.

A missed opportunity for greater property price appreciation
Press | 28 Jan 2021

A missed opportunity for greater property price appreciation

The decision to retain the current repo rate has resulted in a missed opportunity for further growth in the property market.

sample image of property alerts

Get instant property alerts

Be the first to see property alerts for your area.
;