BUSINESS NEWS - Despite inflation being the lowest it has been since June 2020, economists widely anticipate that the SARB will keep the repo rate unchanged in May.
Thus far, the ongoing global trade tensions and domestic economic challenges have led the SARB to adopt a cautious approach, favouring rate stability to navigate potential risks.
However, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, believes that the benefits of an interest rate cut at this time would outweigh the potential risks that the SARB is guarding against.
“Reducing the repo rate could boost consumer confidence, increase affordability, and encourage greater economic growth. Lower interest rates translate into reduced monthly repayments on home loans and other debts, putting more money back into consumers' pockets and stimulating broader economic activity. This additional disposable income will positively impact other sectors reliant on consumer spending, driving economic growth across the board,” he explains.
Moreover, Goslett adds that an interest rate cut will send a strong positive signal to international and local investors, reinforcing confidence in South Africa’s economic recovery trajectory, especially following the instability around VAT.
While the possibility of a rate cut is more likely later in the year, the SARB is at least expected to maintain the current rate in the near term. “If nothing else, consistent interest rates do contribute to a predictable market environment, benefiting all stakeholders involved in property transactions,” Goslett notes.
“My advice to buyers is to utilize the stable interest rate period to evaluate your financial capacity and explore finance options – but try to get into the market before interest rates drop, as lower rates typically attract more buyers, leading to increased competition and potentially higher property prices,” he suggests.
“For homeowners and real estate agents, staying informed and proactive will be key to navigating the evolving economic landscape,” he concludes.
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