Economists and property experts have been predicting an interest rate hike of 0.5% this month, but there is a chance it could be 0.75%.
By the end of January, after that month’s hike, the interest rate could reach 11%, says Nondumiso Ncapai, managing executive at Absa Home Loans.
“We forecast further hikes of 75bp by the South African Reserve Bank (SARB) this month and 50bp in January, taking the repo rate to 7.50%.”
Whatever the repo rate is, the prime lending rate of the banks is 3.5% higher.
Asked what effect this will have on homeowners, Ncapai explained the average price of a new home was currently around R1.25 million, and that, using this price and loan term of 20 years as a basis, a 0.75% increase in the…