South African homeowners may soon receive financial relief

South African homeowners might receive good news this week, as some economists expect the South African Reserve Bank (SARB) to lower the repo rate during its meeting on Thursday.

Since July 2024, the SARB has already cut rates three times. Experts remain hopeful that this trend will continue into 2025, possibly starting as early as this month.

Lowering the repo rate would impact interest rates, allowing South African homeowners to pay less on their bond instalments. Since interest makes up a large portion of bond repayments, the potential savings could be substantial. According to BusinessTech, the average property owner could end up saving several hundred rand in this rate-cutting cycle. 

Will the reserve bank cut interest rates?

Economists who support an interest rate cut, including analysts at the Bank of America, argue their case by pointing to inflation sitting at 2.8%, well within the SARB’s target range, and a dollar exchange rate below R18/$. They also highlight that central banks in the UK, Europe, and China have already cut rates since April.

However, many South African economists point out that the SARB tends to act cautiously. Given ongoing global uncertainty and the rand’s volatility, the bank might postpone lowering interest rates, meaning South African homeowners could have to wait longer for financial relief.

The Monetary Policy Committee (MPC) of the SARB will make the decision. Whether they cut or maintain the interest rates, economists agree that the committee is unlikely to be united in their decision. So, even if rates don’t come down this week, there may still be cuts in the coming months. 

How much will South African homeowners save?

The average price of a new home in South Africa is R1 661 519. In July 2024, the interest rate was 11.75%. It’s currently at 11% after January’s cut.

BusinessTech calculates the following savings for South African homeowners between July 2024 and May 2025:

• A bond of R850 000 saved R438 in monthly repayments
• A bond of R1 661 519 (the average home price) saved R856 in monthly repayments
• A bond of R2 million saved R1030 in monthly repayments

Further rate cuts will only enhance savings for homeowners.