Every time the MPC is set to meet, South Africans wait in bated breath to hear if their debt repayments will finally become easier to manage following a much-anticipated interest rate cut. After the markets responding positively to the new Government of National Unity, it remains to be seen whether that relief will come this month or not.
The SARB's Monetary Policy Committee, last month decided to keep the repurchase rate at its current level of 8.25% per year, meaning that the prime rate holds steady at 11.75%.The decision was unanimous.
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“It is difficult to predict what the MPC will do at this meeting at the end of July,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, “and while I am optimistic that an interest rate cut might come soon, I would caution homeowners not to get their hopes too set on this,” he advises.
Many experts are predicting that interest rates will hold steady in July and are likely to drop by 25 basis points at the September meeting only. The latest inflation stats are unchanged from April at 5.2% in May. It might take a few months before inflation drops closer to the MPC’s target of 4.5%. Only then are we likely to experience our first interest rate cut.
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Governor of the South African Reserve Bank, Lesetja Kganyago, shared in his presentation in May that, "We had an uncertain start to 2024, but recently, developments have been somewhat more positive.
Kganyago shares that inflation outcomes were worse than expected early in the year, leading to a repricing of rate expectations. There is still considerable uncertainty about the longer-run inflation outlook, globally. That said, inflation outcomes in the United States have been more benign recently, and markets still see some room for adjustments by the US Federal Reserve this year. We may also see easing by other major central banks.
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Goslett says the fact that the markets are responding positively to the GNU makes me optimistic for economic growth and, as a by-product, growth in the real estate market too. The positive global response to the GNU is also likely to have a positive impact on the local housing market, as it makes South Africa seem more stable and appealing to foreign investors. It all depends how long this positive sentiment will last. The outlook can change quite quickly depending on how the political landscape evolves,”.
“We are living through interesting times at the moment. I remain cautiously optimistic for what lies ahead and am hopeful to see more positive trends emerge within the local housing market as the year progresses,” he says.
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Below are a few lifestyle expenses homeowners should consider when trying to find ways to cut their expenses: (read full article here)
- If you don’t already, start purchasing groceries in bulk to cut down on your monthly food bill – and avoid buying fast food, takeaway coffees, or eating out. The average cost of a takeaway coffee is around R30. If you do this daily, five days a week, you’re spending around R600 a month just on coffee.
- If you need new clothing, consider thrift stores or second-hand items sold through Facebook Marketplace. Avoid buying anything on store credit (unless they’re interest-free accounts) and, if possible, pay these off as soon as you can and close the accounts.
- Cancel any unnecessary subscription services. These days, it is common to have subscriptions to multiple streaming services. Try to limit your household to just one at a time to save a couple of hundred rands each month.
- If your cell phone contract is nearing its end, switch to pay-as-you-go instead of opting for an upgrade.
- Shop for cheaper brands. It is worth finding cheaper alternatives for your daily consumables, such as perfumes, deodorants, make-up, cleaning and food supplies, as this will go a long way to helping you reduce your monthly expenses.
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