Property

How much you will save on your bond after the latest interest rate cut in South Africa

Malcolm Libera

 ·31 Jul 2025

The South African Reserve Bank (SARB) has reduced the repo rate by 25 basis points, which provides some additional financial relief for homeowners and prospective buyers.

This decision, announced after the Monetary Policy Committee (MPC) meeting, brings the repo rate down to 7.00% and the prime lending rate to 10.50%.

The decision was in line with economists’ and analysts’ views ahead of the meeting, where opinions were tilted towards a small cut.

While some had anticipated a hold on rates, given the imminent application of a 30% tariff on exports to the United States from Friday, 1 August, the MPC followed through with a cut.

Notably, the vote was unanimous.

Reserve Bank governor Lesetja Kganyago said that the global economic conditions remain uncertain amid the United States’ tariff push, while local conditions in South Africa remain under pressure.

He said the bank had warned that economic data in South Africa was weak, and this reflected in the GDP data that was published by Stats SA, including a downward revision to 2024’s growth.

However, more recent data have pointed to more positive growth, suggesting that the economy picked up in the second quarter of the year.

Inflation has remained low, but expectations have moderated, with the expectation that headline inflation will rise over the next few months, averaging 3.3% for the year.

The decision to cut rates has stirred optimism across the property sector. However, some have said that more is needed. 

Samuel Seeff, chairman of the Seeff Property Group, said the 25bps cut is welcome, but the economy needs more.

Seeff said that 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, it is still not enough. 

He added that more needs to be done to really give the economy the rocket boost that it needs.

Tyson Properties Director, Francois du Toit, agrees that this small interest rate cut will not only help people to feel more positive but to keep the property market on the path to recovery.

“Whilst the Cape Town market continues to boom, the KwaZulu-Natal market is holding firm. Johannesburg is seeing a slow but consistent recovery.” 

Taking a longer-term view, he notes that households across the world are likely to remain under pressure. He added the new ‘worldwide norm’ is for people to be more mindful of their budgets. 

Although the Reserve Bank has held back on interest rate decreases since May, its latest move, which brings the prime lending rate down to 10.5%, will put only a small amount back into the pockets of cash-strapped households. 

Because this is likely to mark the end of the rate cut cycle, Tyson believes homeowners must tighten their purse strings to plug budget leaks and bring disposable income back to acceptable levels.

Andrew Golding, chief executive of the Pam Golding Property group, added that the 25bps cut is a positive sign for the property market. 

He said the cut is extremely positive news for the residential property market, providing increased confidence and incentive for aspirant home buyers and some relief for those with existing mortgages.

He said the recent interest rate cuts, combined with lower fuel prices and subdued consumer inflation, are anticipated to bolster first-time buyer demand, which had stalled at 46.4% of applications in H1 2025. 

This reduction in interest rates is also expected to positively influence overall market sentiment.

Some have also recommended that borrowers use the savings from lower interest rates to accelerate their bond repayments.

By maintaining higher monthly payments, homeowners can reduce their loan terms and save significantly on interest costs over time.

Savings

While some property experts called for a steeper cut, the 25bps provides tangible relief of at least R143 at the lower end.

Data from ooba Home Loans shows that a 25-basis-point reduction translates to monthly savings of R168 on a R1 million bond and R337 on a R2 million bond.

The latest oobarometer report highlighted that the average home price in South Africa has climbed to R1,695,257. This means a 0.25% drop in interest rates could bring notable relief to homeowners.

For the average South African home priced at R1.695 million, the monthly repayment decreases by R286, providing much-needed relief to households.

While uncertainties remain, the combination of lower rates, easing inflation, and renewed confidence will benefit the property market and prospective buyers.

The savings on bonds for property prices between R850,000 and R5 million can be found below: