On Thursday, 18th November 2021 the South African Reserve Bank (SARB) decided to increase the Repo Rate by 0.25%, taking it to 3.75%. Pushing the Prime lending rate to 7.75%
The Repo rate is the rate at which banks borrow from the SARB, and the Prime rate is the rate at which commercial banks lend out to the public.
This effectively means that the servicing costs on debt will begin to rise. With every R1 million in debt, it will equate to an extra R210-R300 in monthly fees.
It may seem manageable now, however, I would encourage all of you to start paying down your debt aggressively if you can, because interest rates are set to continue to rise further in each quarter of 2022, 2023, and 2024. This means by June 2023 we could see an additional 200-300bps increase in that time, taking the Prime lending rate to over 10%.
This will have detrimental effects on our economy as less money will be in circulation. It’s also going to put severe pressure on many indebted households.
On top of this, in my opinion, it is going to send property prices tumbling by 20-30%, it is why I have stated several times that this is a renter’s market.
Wages have remained flat over the last decade and disposable income is stretched to the max. This simply means that rental prices will have to come down to attract the most creditworthy tenants, all while the costs of owning property increases.
I foresee an over supply and lack of demand a year from now.
It is why I decided to put this property investment eBook together. To ensure one can prepare themselves for what I see is coming.
For today only, I’ve decided to give you 30% off
Discount code: interest
Click here to purchase the book
Additional reading:
Stay safe everyone,
see you next week :)