Despite the hopes of many, the Monetary Policy Committee (MPC) has decided to raise interest rates by 50 basis points at their last meeting. This news is unsettling for many South Africans, as it seems that another interest rate hike might be on the horizon at the upcoming meeting in May. Interest rates are currently at their highest point since 2009, but it is important to note that they are not as high as they were during the 2008 market crash when they reached a staggering 15.5%.
While we do not anticipate interest rates to reach those levels again, it is important to prepare for the possibility of further rate hikes in the near future. Homeowners may already be facing affordability issues, and it is crucial to take action sooner rather than later. We advise homeowners to avoid missing repayments or making partial repayments, as this will negatively impact their credit score and take a long time to recover from. Instead, homeowners should be proactive and upfront about their financial situation and seek solutions before things get out of hand.
For those considering downsizing, it is still possible to achieve a fair market value for your property if it is marketed correctly. However, it is important to recognize that rising interest rates affect both sides of property transactions. As interest rates increase, it becomes more difficult for buyers to finance a home and afford repayments, resulting in a smaller pool of potential buyers. Therefore, it is essential for sellers to adjust their pricing to reflect current market conditions.
If you need help determining what you can and can't afford, we recommend using affordability calculators and tools. You can find a list of these on our website.
Try our list of affordability calculators and tools here: https://www.propertymosselbay.co.za/calculators Additionally, it will be essential to lean on the advice of reliable professionals, such as your local Mossel Bay Properties agent. They can provide insights into how your local market is performing and offer solutions best suited for your current financial situation. By taking a proactive approach and seeking guidance from professionals, you can prepare yourself and your property for potential interest rate hikes.