Prime Interest Rate Increased to 11.75%

Prime Interest Rate Increased to 11.75%

Category Property news

In a significant move, the South African Reserve Bank's (SARB) Monetary Policy Committee announced a repo rate increase of 50 basis points during its recent meeting held on 25 May 2023. This decision elevates the prime interest rate from its existing level of 11.25% to 11.75%, effective immediately.

The decision to increase the repo rate again, despite inflation easing, reflects the ongoing efforts of SARB to address various economic challenges faced by the country, including the depreciation of the rand, which is trading at a concerning R19.33 to the US dollar, as of 25 May 2023.

This move marks another step in the tightening monetary policy cycle that has been underway since November 2021 and is a further blow to homeowners with variable-rate bonds, vehicle financing and other loans linked to the prime interest rate. With added financial pressure and the increase in the cost of living, more homeowners are considering selling and moving to more affordable homes.

"It is unfortunate that homeowners will see yet another increase in their monthly repayments but as we've mentioned before, assessing affordability prior to making a property purchase is key to ensuring you can manage fluctuations with some comfort," says Mike Greeff, CEO of Greeff Christie's International Real Estate. "If you're currently experiencing affordability challenges, speak to one of our area specialists who can offer advice and help you navigate your options."

Despite these challenges, the Cape Town property market is healthy and primed for sellers, with residential prices growing by 141% over the past decade in comparison to other metros. In the past 12 months alone, prices increased by 7.4% in our province, and with semigration continuing to be a trend, we've seen buyers from all over South Africa enquiring about well-priced properties in the Mother City.

Here's an indication of how this latest increase will impact your monthly bond repayments:

Use BetterBond's Bond Repayment Calculator to calculate your new repayment amount, if your bond amount is higher than what we've listed above.

Author: Greeff Christie's International Real Estate