THE SA Reserve Bank’s Monetary Policy Committee (MPC) is set to increase the repo rate by 50 basis points (bps) at the July meeting, according to Finder.com’s latest SARB Repo Rate Forecast Report.
The next SARB MPC meeting is scheduled for July 21.
An overwhelming majority of Finder's panel of 26 economists, academics, and property specialists (88 percent) said the rate will increase.
Some 73 percent are forecasting a 50bp increase, 12 percent a 25bp increase and one panellist (4 percent) an increase of 75 bps.
Stellenbosch University's Stan du Plessis is part of the majority who thinks the MPC will and should increase the rate by 50bps.
"Inflationary pressure has risen faster than we had previously thought. In addition the international capital market shock risk is greater than before due to the Fed's rapid normalisation of their policy rate. The SARB cannot afford to fall behind the curve," Du Plessis said.
However, not everyone thinks the MPC should increase the rate. While Four Rivers Analysts managing director Lebohang Liepollo Pheko predicts the MPC will hold the rate, she thinks it should cut the rate by 50bps or more due to growing financial pressure on consumers.
Sanisha Packirisamy, an economist with Momentum Investments, said recently, “We expect an accelerated global hiking cycle and the fear of higher underlying inflation outcomes to motivate further local interest rate hikes to a peak of 6.25 percent by the end of the first quarter of next year.”
Some 86 percent of panellists say rate increases are likely or very likely to lead to mortgage stress and 62 percent are negative on housing affordability.
By the end of the year the panel expects the percentage of homeowners selling property due to financial pressure to reach 20.75 percent, up from 20 percent in quarter four of 2021.
However the majority (55 percent) think property sales will continue to grow in 2022 while 36 percent don’t think this will happen and 9 percent are unsure.
With the panel forecasting a number of rate increases this year, it only expects property prices to experience marginal growth with Cape Town and Thembisa boasting the biggest gains.
Cape Town and Thembisa property prices are expected to increase 3 percent on average, followed by Pretoria (2.71 percent), Johannesburg (2.57 percent) and East London (2.33 percent).
BUSINESS REPORT