R750 per month relief for homeowners in South Africa still coming

Several experts still expect interest rates to be cut by another 50 bps this year. Together with the 25bps cut in January, this would result in a net 0.75%pt reduction in bond repayments, meaning the average homeowner would save R742 per month by the end of 2025.

In January, the South African Reserve Bank (SARB) cut interest rates by 25 basis points, dropping the repo rate to 7.50%.

This decision by the Monetary Policy Committee (MPC) was in line with expectations on the back of lower inflation in South Africa. Four members voted for the cut, while two voted for rates to remain unchanged.

While risks to interest rates remain, most economists expect the cutting cycle to continue in 2025, although some are more optimistic than others.

The cautious experts–such as the chief economists from Nedbank, Standard Bank, and Efficient Group– only expect another 25bps cut this year.

However, the more optimistic ones believe that there will be two more 25bps cuts in 225, meaning a total of 75bps for the year.

These economists include Investec’s Annabel Bishop, Old Mutual’s Johann Els, and FNB’s senior economist Koketso Mano.

Bishop believes that the MPC will pause the next cut in the interest rate cycle until around mid-year. The first 25 basis point cut is expected for July, followed by another in November.

Bishop added that the MPC statement supports a pause in South Africa’s interest rate-cutting cycle, noting that risks are assessed to the upside following the three recent cuts.

Els believes that CPI inflation will total 3.8% this year, remaining below 4.0% in the first half and 4.5% in the second half.

Els said that relatively low inflation levels should allow the SARB space to cut interest rates by another cumulative 50 basis points.

Mano noted that local headline inflation is expected to remain anchored over the medium term, with interest rates remaining restrictive, keeping demand-driven inflation contained.

“This means the MPC should cut interest rates by another 50 basis points, which would bring the repo rate to 7% by the end of 2025,” she said.

How much homeowners are expected to save

The latest oobarometer report highlighted that the average home price in South Africa has climbed to R1,458,924. This means a 0.50% drop in interest rates could bring notable relief to homeowners.

A further 50bps cut would reduce the monthly repayment on a loan of this size by approximately R742. Those with larger home loans—up to R5 million—could see monthly savings of as much as R2,544.

However, the savings offered by the cuts could be short-lived as homeowners are expected to struggle with rising costs in other areas.

Investec economist Lara Hodes noted that while inflation remains low, price hikes in essential services like electricity and water continue above inflation, which could quickly offset any reductions in bond repayments.

Despite these pressures, Hodes added that lower interest rates could provide much-needed support for the property market and household finances.

Rate cuts generally enhance affordability and encourage homebuying while still easing the financial burden on existing homeowners.

That said, economic uncertainty remains a key concern. Factors such as global monetary policy shifts, inflation risks, and the rand’s volatility highlight the need for homeowners to adopt a cautious approach to their financial planning.

The potential savings based on different property prices are illustrated in the table below.