Interest Rates

As you no doubt know by now, the interest rate went up on 24 March 2022.

Prior to the announcement, a panel of 18 economists, academics, and property specialists were recently surveyed, and they unanimously forecast that the SARB will increase the repo rate. The key word here is unanimous, their opinions proved correct as the prime lending rate was indeed increased.

It is important to note that:

• 67% (12 out of 18) panellists predicted the SARB will hike the rate at least twice after March.
• Most expect the repo rate to reach 5% by the end of 2022. (It is currently 4%, so they are pricing in another 1% increase.)

Prior to the announcement, there was an outside chance that they could increase the rate by 0.5% (due to oil/inflation) etc. It is important to note that out of the five voting members of the MPC, two voted to increase the rate by 0.5%, and 3 voted for 0.25%. The MPC confirmed that the rate has now increased by 0.25%, increasing the prime overdraft rate to 7.75%.

The bottom line is, we are in an interest-increasing cycle, so plan and budget accordingly.

The property market in Somerset West is still buoyant. Whilst interest rates are clearly on the upward trend, we are still experiencing high levels of demand from buyers, so should you be thinking of selling your property in Somerset West, take advantage of the heightened demand from the buyers and contact Seeff for a consultation or comparative market analysis.

The table below summarises the financial impact of the most recent 0.25% increase.