Interest Rate Hike - FNB

“No longer do we expect a mild strengthening in 2014, but instead a mild slowdown in the market,” FNB said in a statement.

“While one lone interest rate hike doesn’t make a massive difference to instalment repayment values, we believe it will have a significant impact on buyer sentiment because many aspirant buyers will know that interest rate hiking in South Africa, once it starts, normally doesn’t stop at one lone hike.”

It would curb speculative activity and soften the demand for luxury or “non-essential home buying”, the bank said.

The SA Reserve Bank raised its repo rate by half a percentage point to 5.5 percent last week. Financial markets were expecting further hikes to fight inflation.

- Sapa