{"id":845438,"date":"2025-12-07T13:00:00","date_gmt":"2025-12-07T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=845438"},"modified":"2025-12-05T13:17:04","modified_gmt":"2025-12-05T11:17:04","slug":"reserve-bank-holding-back-over-r1300-per-month-relief-for-homeowners-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/845438\/reserve-bank-holding-back-over-r1300-per-month-relief-for-homeowners-in-south-africa\/","title":{"rendered":"Reserve Bank holding back over R1,300 per month relief for homeowners in South Africa"},"content":{"rendered":"\n

Renowned economist Roelof Botha says that the prime lending rate should be 1.25% lower than it currently is, which would mean an extra savings of R1,388 per month from the current rate.  <\/p>\n\n\n\n

Both said the latest Altron FinTech Household Resilience Index shows that, despite immense pressures, South Africans continue to display extraordinary staying power.<\/p>\n\n\n\n

Reflecting on the second-quarter data, Botha said the figures show a level of improvement and confirm that as South Africans, it seems as though we’re trying our best to get by\u2014and we actually are getting by.<\/p>\n\n\n\n

Botha argued that if one had to choose a single word to describe South Africans in 2025, it would be resilience. <\/p>\n\n\n\n

However, the index reflected a year-on-year improvement of 2.3%, which looks nice on paper, but the picture becomes more complex when explored in detail.<\/p>\n\n\n\n

Botha noted that while many households are coping, a significant number are drawing on pension savings to stay afloat. <\/p>\n\n\n\n

\u201cThere\u2019s a lot of activity on the pension fund side, but unfortunately, these are people dipping into their pension funds,\u201d he says.<\/p>\n\n\n\n

He warned that these withdrawals are capped, taxed, and ultimately risky for long-term financial security.<\/p>\n\n\n\n

While these withdrawals help in emergencies, they have artificially boosted parts of the index. <\/p>\n\n\n\n

\u201cThese pension fund withdrawals have made a difference, but they\u2019re not sustainable in the long term,\u201d he stressed.<\/p>\n\n\n\n

Turning to interest rates, Botha reaffirmed a long-held concern that South Africa\u2019s borrowing costs remain unnecessarily high. <\/p>\n\n\n\n

In November, the South African Reserve Bank (SARB) reduced the repo rate by 25 basis points, which provides some additional financial relief for homeowners and prospective buyers.<\/p>\n\n\n\n

This decision, announced after the Monetary Policy Committee (MPC) meeting, brings the repo rate to 6.75% and the prime lending rate to 10.25%. The decision was unanimous.<\/p>\n\n\n\n

While grateful for the recent cuts, Botha said the reduction is far from sufficient. \u201cWe\u2019ve had a reduction of 150 basis points in the prime rate, and we are very grateful for that,\u201d he noted.<\/p>\n\n\n\n

South Africa urgently needs deeper interest rate cuts<\/h2>\n\n\n
\n
\"\"<\/a>
Economist, Dr Roelof Botha.<\/em><\/figcaption><\/figure><\/div>\n\n\n

However, he argued the current prime lending rate of 10.25% remains elevated, particularly when compared to inflation. \u201cPrime 10.25 minus CPI 3.6 gives you a 6.8% real prime rate,\u201d he explained.<\/p>\n\n\n\n

Botha contrasted this with the period under former Reserve Bank governor Gill Marcus, whom he described as \u201cthe best governor of the Reserve Bank we\u2019ve ever had.\u201d<\/p>\n\n\n\n

During her tenure, the real prime rate averaged 3.4% and the economy grew steadily at 2% to 3% per year.<\/p>\n\n\n\n

In his view, monetary policy took a harmful turn after 2015. \u201cThere has been a profound shift in emphasis and the approach of the Reserve Bank has changed dramatically for the worse,\u201d he argued.<\/p>\n\n\n\n

He disputed the Reserve Bank\u2019s claim that higher interest rates brought inflation under control.<\/p>\n\n\n\n

\u201cThey are claiming credit for lower inflation, which is absolute nonsense. Our inflation came down because of a reduction in the oil price and a reduction in global freight shipping charges,\u201d Botha said.<\/p>\n\n\n\n

He noted that these costs spiked by 400% and 700% respectively after the pandemic before coming back down.<\/p>\n\n\n\n

Botha stressed that South Africa urgently needs deeper interest rate cuts to support households and stimulate growth. <\/p>\n\n\n\n

\u201cWe are sitting with this dilemma that we need deep interest rate cuts and our prime overdraft rate should be 9% or lower,\u201d he said.<\/p>\n\n\n\n

He added that many economists agree, and that ongoing research continues to reveal the economic damage caused by an overly restrictive monetary stance.<\/p>\n\n\n\n

Despite these challenges, Botha repeatedly returns to one theme: resilience. South Africans continue to navigate adversity with determination..<\/p>\n\n\n\n

However, he warned that they deserve a more supportive interest-rate environment to match their efforts.<\/p>\n\n\n\n

Data from ooba Home Loans shows that a 125-basis-point reduction to a prime lending rate of 9% translates to extra monthly savings of R819 on a R1 million bond and R1,638 on a R2 million bond.<\/p>\n\n\n\n

The latest oobarometer report highlighted that the average home price in South Africa has climbed to R1,695,257. <\/p>\n\n\n\n

This means a 1.25% drop in interest rates would bring notable relief to homeowners over the last year.<\/p>\n\n\n\n

For the average South African home priced at R1.695 million, the monthly repayment decreases by R1,388, providing much-needed relief to households.<\/p>\n\n\n\n

While uncertainties remain, the combination of lower rates, easing inflation, and renewed confidence will benefit the property market and prospective buyers.<\/p>\n","protected":false},"excerpt":{"rendered":"

Renowned economist Roelof Botha says that the prime lending rate should be 1.25% lower than it currently is in South Africa. <\/p>\n","protected":false},"author":92,"featured_media":845483,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[23545,853,21912],"class_list":["post-845438","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-altron-fintech-household-resilience-index","tag-south-africa","tag-the-south-african-reserve-bank-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=845438"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845438\/revisions"}],"predecessor-version":[{"id":845662,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845438\/revisions\/845662"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/845483"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=845438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=845438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=845438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}