The South African Reserve Bank will increase the repo rate at the March MPC meeting, according to 95% of panellists on Finder.com’s SARB Repo Rate Forecast Report.
The Monetary Policy Committee is set to meet and deliver their decision around the interest rate policy on 30 March 2023.
77% of the panellists think the repo rate will increase by 25 bps, while 14% forecast a 50 bps increase.
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However the panel is divided on whether or not this will be the rate peak. 55% of panelists expect March to be the peak of this rate cycle, while 23% think the rate will peak in May and an additional 18% expect the peak to hit later this year or early next year.
Oxford Economics Africa Senior Economist Jee-A van der Linde thinks the rate will increase once more in March but says it’s a tight call on whether or not to hold.
"Headline inflation is still above target, and the rand has come under renewed pressure against the US dollar. Regardless, it should be a tight call. We expect the apex bank will wrap up the current hiking cycle with a final 25-bps rate increase, which should help to take the edge off inflation."
Efficient Group Chief Economist Dawie Roodt agrees the rate will and should increase by 25 bps in March but expects one more rate increase in May.
"We are getting closer to the upper end of the CPI and interest rate cycle and small increments should suffice."
READ: Interest rate announcement predictions | What to expect and how to prepare
However nearly one third of panellists (32%), including BankservAfrica Head of Stakeholder Engagements Shergeran Naidoo, think the rate should hold at the March meeting.
"Consumers are under pressure with the high interest rates. Although CPI is decreasing, it's not at the rate that the SARB would like, and is still outside the 3%-6% range…"
88% of the panel, including Just Property CEO Paul Stevens, think rising interest rates will mean fewer first home buyers will enter the market in 2023.
"...Affordability is key and the lower interest rates seen in 2020/21 spiked the first-time buyer. With the current higher interest rate environment and general high cost of living, we are going to see a slow down in first time buyers," he says.
Nedbank economist Liandra da Silva agrees higher rates will make it harder to purchase property, but only to a certain extent.
"First time home-buyers that are adamant about the type of home they want will likely hold off plans to purchase if what they want is out of budget due to higher interest rates. However, those buyers that are a bit more flexible and willing to “downgrade” their wants in order to stay within budget could still enter the market.
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"In essence, a high interest rate environment dampens mortgage demand, but it can also boost supply, thus creating a demand-supply mismatch that consumers can take advantage of. If there is low demand for a property, an interested buyer has a higher chance of convincing the seller to reduce the price, even just slightly."
While higher interest rates may dampen demand among first home buyers this year, the rate could start to taper off in 2024 with 57% of panellists expecting the rate to decrease in the first half of the year and 52% in the second half of the year.
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