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An expert’s home loan interest rate predictions

A succession of hikes has seen the interest rate reach a 15-year high, but things are expected to change in the near future. Find out more.

Interest rate predictions

Article summary

  • In September 2023, the South African Reserve Bank left the interest rate unchanged, which experts predict will be the trend for 2024.
  • Experts were initially predicting interest rate drops but concerns over inflation have tempered those expectations.
  • The hope is that the US will begin to drop interest rates in September 2024, which will influence the South African market.

South African interest rates have been at a 15-year high for the past year, as the South African Reserve Bank introduced several rate hikes to compensate for inflation.

However, things began to look positive in September 2023 when the SARB opted to leave the interest rate the same.

This decision was repeated in early 2024. As such, as of April 2024, the interest rate remains at its May 2023 level of 11.75%.

Note: There may be uncertainty regarding interest rates, but there doesn’t have to be uncertainty regarding your bond payments. Use our Bond Repayment Calculator and you can determine what you will owe on bond repayments per month, enabling you to budget accordingly.

What experts say about 2024 interest rates

The consensus is that interest rate hikes are unlikely for the time being.

According to Stonehage Fleming senior analyst Jan-Daan van Wyk:

“We believe the SARB will maintain the repo rate at its current restrictive level of 8.25% until after the South African national elections have been held, the Fed has started cutting US interest rates, and some of the fiscal pressures have eased domestically.”

However, initial positivity regarding potential interest rate drops has taken a turn as inflation appears to be a major factor.

In early 2024, experts were predicting that SARB would begin to lower interest rates later in the year, perhaps even as early as May 2024.

Reserve Bank governor Lesetja Kganyago has made it clear interest rates will not be lowered until inflation begins to drop.

According to Investec economist Lara Hodes:

“The SARB has conveyed its determination to see CPI inflation reach 4.5%, the mid-point of the inflation target range this year; however, risks to the inflation outcome remain to the upside.”

Investec chief economist Annabel Bishop says that interest rate predictions were based on expectations for the US market. The probability for US interest rate cuts dropped 50% due to inflation concerns.

“The core PCE deflator is the key inflation measure US monetary policy officials watch in their implicit inflation targeting. The PCE deflator measure rose to 2.5% y/y from 2.4% y/y in January, also not inspiring market confidence,” said Bishop.

Are any cuts still expected?

According to Bishop, an interest rate cut in September 2024 is likely. Later than expected, but still encouraging.

What does this mean for homebuyers?

It’s still a good time to invest, as the interest rate is likely to remain unchanged, and South Africa is still a buyer’s market.

Inflation combined with an expected delay in interest rate hikes may be discouraging to buyers, but housing supply still outstrips demand and competition between banks is strong, improving the chances of obtaining home loan approval.

How can buyers give themselves the best chance?

With the market being so volatile, it helps to have a solid estimate of the home loan you’ll be able to afford, which you can obtain by getting prequalified with ooba Home Loans.

Prequalification will assess your financial situation (including your credit record, the most important factor) and calculate the home loan you qualify for. This will serve as proof to the bank that you qualify for that home loan amount.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.

Get prequalified for a home loan today

DIY with our online prequalification tool, or speak to an expert.

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