Consumers and homeowners are anxiously awaiting an interest rate cut. The repo rate is 8.25%, and the prime interest rate 11.75%. It has remained unchanged at a 15-year high since mid-2023.
The prime interest rate is about 1.75% higher compared to the start of 2020 before the onset of the Covid-pandemic. This is impacting affordability for property buyers who are also hit by higher living costs and slow wage growth. Deeds Office transaction volumes for 2023 compared to 2022 are down by about 20%, and the overall Rand-value IS down by about 14%.
The lowest interest rate level over the last 30-years was 7% in July 2020 during the Covid-pandemic. It stayed at that level for 14-months before it started increasing again. The low interest rate boosted property sales to the highest levels since 2007/8 in terms of volume and prices. The interest rate spiked to 24.5% in late 1998 and averaged around 12% in the 2000s.
Once any interest rate adjustment is announced by the Reserve Bank, the various banks and financial institutions will then adjust their prime rate accordingly and advise their customers of how this will affect their debt repayments.