Summary of the change
The South African Reserve Bank (SARB) has cut the repo rate from 7.25% to 7%, effective 1 August 2025. This means the prime lending rate — the rate banks charge most customers — has dropped from 10.75% to 10.50%, its lowest level since 2022.
What this means for you:
- If you have a home loan, your monthly repayments will decrease slightly.
- If you are planning to buy a home, your loan may become slightly easier to qualify for and more affordable.
Quick guide for beginners:
Repo rate: The interest rate at which the SARB lends money to commercial banks.
- When the repo rate goes down, banks pay less to borrow money, and they usually pass some of that saving on to consumers in the form of lower interest rates.
Prime lending rate: The rate banks charge their most reliable customers.
- Your home loan or car loan interest rate is often linked to this rate (e.g., “prime plus 1%”).
Basis points (bps): A financial way to describe very small interest rate changes.
- 1% = 100 basis points, so 25 basis points = 0.25%.
- This cut of 25 basis points lowered the repo rate from 7.25% to 7%.
This latest decrease sees the prime lending rate drop to its lowest point since 2022, at 10.50%, signalling confidence in the recovery of the economy amid uncertain global economic conditions. The announcement’s timing is a day before President Trump’s deadline for many nations to forge bilateral trade deals or face, in SA's case, a steep 30% tariff on SA exports to the US.
Commenting on the announcement are a number of real estate stakeholders:
Lew Geffen Sotheby’s International Realty
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, said, “It’s certainly great that the financial pressure on households will ease slightly in the short term. On an R2-million bond, monthly repayments will go down by just below R340 a month, but we’re on the precipice of an economic disaster, and while this rate cut will help for now, it might come back to bite us in the long term. “We have record unemployment, and basic household costs such as electricity have risen by several hundred per cent in recent years. On average, households are spending an alarming two-thirds of their income servicing debt.” Geffen also said the volatility on the trade front is one of the major reasons South Africans have been returning to the safety of property investment because it’s tangible. “Real estate will always be a safe haven investment. It is a long-term appreciation asset, people understand that it is the foundation of personal wealth creation, and the uptick in the market this year is testament to that.” Geffen’s advice to sellers in the current market is to be realistic about pricing, and to buyers not to extend themselves to the limit.
Bradd Bendall, BetterBond National Head of Sales
"This cut sends a strong signal to investors that the country is intent on driving economic growth despite global challenges. South Africa’s move is aligned with a cautious global trend towards stimulating consumer spending and investment," said Bendall. “A lower prime lending rate provides much-needed relief to consumers and homeowners struggling to balance their monthly obligations with rising living expenses. For the average homeowner with a bond, this reduction could translate to meaningful monthly savings. “We expect this cut will further invigorate the housing market, which has already shown remarkable signs of recovery in recent months. BetterBond’s July data shows that bond applications rose by 7.4% for the 12 months to May 2025, with home loans granted up by an impressive 13.6%," Bendall remarked. “These volumes point to renewed buyer confidence and a more stable market environment that should encourage more aspirant first-time buyers to enter the property market.”
Harry Kellan, FNB, CEO
FNB will adjust its rates on prime-linked accounts with effect from Friday, 1 August 2025. “The Reserve Bank’s decision to cut interest rates by 25 basis points is a timely and strategic move aimed at supporting households and businesses. This decision will help soften some of the impact of tariffs on the economy. We do expect certain sectors will be adversely affected by the new tariffs, but this does not fully erode the good growth momentum across the economy, as we expect to see real growth for 2025 to be better than 2024, and this should continue into next year.” Kellan notes that the rate cut will provide immediate relief to consumers and businesses by lowering the cost of borrowing. “Key sectors of the economy such as construction, retail, and manufacturing have shown early signs of slowing. Today’s rate cut sets out to stabilise and reverse these trends by increasing the affordability of credit and encouraging investment. Encouragingly, our inflation outlook remains benign, and while we’ve seen a sustained period of uninterrupted electricity supply, we’re certain that this will yield cumulative, positive results for consumers and businesses.”
Rhys Dyer, CEO of the ooba Group
Dyer has welcomed the decision, saying that “at the current prime lending rate of 10.50%, the monthly repayment on a home priced at our Q2 ’25 average approved bond size of R1,455,712 equates to R14,534 over 20 years—down from R15,776 just a year ago.” Dyer says savings like these add up to almost R15,000 extra in a homeowner’s pocket over the course of a year. Dyer adds that consumers’ improved affordability is reflected in ooba Home Loans’ latest figures. “In Q2 ’25 we saw an 11% year-on-year increase in home loan applications and an 18.5% increase in the total value of these applications. This points to ongoing market recovery, increased buying power, and growing buyer confidence.” Despite global uncertainty, Dyer believes that the demand for homes will build in light of this news and the prospect of a stable, lower interest rate environment. “The market has responded positively this year—even in the face of trade policy volatility—and we expect this to continue.”
Samuel Seeff, chairman of the Seeff Property Group
Seeff says the SARB made the correct decision given that inflation (at 3% for May) is below the Bank’s target range, and the currency has been stable, trading at times below R18/USD. While this cut brings welcome relief for consumers by reducing borrowing costs and putting more money back into their pockets to spend in the economy, Seeff says it is still not enough. More needs to be done to really give the economy the rocket boost that it needs. Nonetheless, the rate cut will make home loans more affordable, and property buyers will find it slightly easier to qualify, thus opening more doors to homeownership. The total rate cuts since September mean that the interest rate will now be 1.25% lower compared to last year. Seeff is encouraging buyers to take advantage of the opportunities in the market. Higher demand and improved house price appreciation at around 3.7% nationally (topping inflation for the first time in two years) also provide an incentive for sellers, especially since many areas are in need of more property listings.
Bolder rate cuts are needed, emphasises Seeff. "Since the interest rate (even after the latest cut) is still higher compared to January 2020, before the onset of the Covid pandemic, we continue to urge the Bank to step up with more cuts now while inflation is contained and the currency stable."
Adrian Goslett, Regional Director and CEO of RE/MAX Southern Africa
RE/MAX Southern Africa views today’s announcement by the MPC as a welcome step towards reinvigorating economic activity and restoring consumer confidence. “This cut is likely to serve as a much-needed catalyst for transaction volumes, particularly in the affordable and mid-market sectors. The market is still price-sensitive, but this rate cut could re-energise interest in property acquisitions,” said Goslett. “While this 0.25% cut may seem modest, it does mark a positive step towards restoring the rate environment we saw before the pandemic. Back in January 2020, the repo rate stood at around 6.5%, and although we’re still well above that, today’s decision brings us incrementally closer. It’s an encouraging signal that the Reserve Bank may be pivoting towards a more growth-friendly stance, which could help unlock pent-up demand in the housing market. “I remain optimistic about how this latest interest rate cut will impact the local housing market and expect to see activity strengthen further in the months to follow,” Goslett concluded.
