21 September 2023

Debt holders can let out a sigh of relief as the Monetary Policy Committee (MPC) announced today that interest rates will remain stable at 8.25% (repo rate), leaving the prime lending rate at 11.75%.

With inflation dropping to 4,7% in July, most economists predicted that interest rates would hold steady at this meeting. “The decision to keep interest rates stable is a reassuring outcome that should go a long way towards instilling investor confidence in an improved economic outlook for the country,” comments Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.

This announcement will also have a positive knock-on effect on the South African property market. “High interest rates have made it challenging for homeowners to keep up with the repayments on their home loans. Year-to-date, we have already seen a 34% increase in the number of mandates received from the banks’ distressed property divisions. By keeping interest rates stable, the MPC has at least provided homeowners some time to recover from the string of interest rate hikes we’ve experienced over the last year,” he notes.

He adds that in terms of our economy, things are hopefully as bad as they will get for now. “All indictors seem to be pointing towards greater stability. If this is the case, then we should hopefully be heading into a period where inflation and interest rates will remain steady, which should also lead to a small drop in interest rates early next year,” Goslett predicts.

Overall, Goslett remains cautiously optimistic about the future. “While it is always a good idea to have a back-up plan in case things take an unexpected turn for the worse, I think it is relatively safe to expect that we have likely seen the last of the interest rate hikes for a while now and that the situation can and will only improve from here,” says Goslett.

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