The Horizon is Bright with Interest Rate Drops
Have you discussed purchasing a home, weighing the pros and cons, and unsure what to do? Well, financially, now is the time to start looking!
According to financial experts, multiple interest rate drops are expected in South Africa during 2025, with some analysts even saying we could drop a potential 100 basis points by the end of the year. Others think an overall 75 or 50 basis point drop is more likely. The repo rate is currently 7.75%, with the prime interest rate being 11.5%.
The Monetary Policy Committee (MPC) is expected to announce on 30 January 2025 whether our interest rates will drop further or remain the same for now. Financial analysts are confident that the repo rate will drop by 25 basis points in January, however, the rest of the year is up for debate. The MPC will likely be cautious about further decreases, as the rand relies on worldwide oil prices and political affiliations to remain stable. This affects our inflation rate, which is the key factor that determines whether the MPC will further decrease the repo rate or not. Due to the current uncertainty of the political climate and the strength of the US dollar, we will likely have more certainty after President Trump's 20 January inauguration and once their fiscal policies become clearer.
How does this affect homeowners?
Simply put, interest rate drops make bond repayments more affordable, as your monthly interest will be less. It is currently a buyer's market, as there is an influx of properties available to purchase compared to the number of people looking to buy property in South Africa. This means that houses are still selling at a slightly lower price, but as interest rates drop, the demand for property increases, and therefore the sellers can increase their prices. So, buying a property now might be the perfect timing!
Get in touch with one of our agents now.
Sources:
https://businesstech.co.za/news/finance/806121/good-news-for-interest-rates-in-south-africa-3/