South African homeowners may soon breathe a collective sigh of relief as interest rate relief edges closer, potentially saving bondholders up to R2,500 monthly. This comes amid growing speculation that the South African Reserve Bank (SARB) could resume cutting interest rates in the face of stabilising global markets and subdued inflation.
Although the SARB is widely expected to hold interest rates steady at its next Monetary Policy Committee (MPC) meeting on May 29, economists believe a 25 basis point (bps) cut is still on the table—one that could result in significant savings for bondholders.
Since the rate-cutting cycle began in September 2024, the prime lending rate has fallen from 11.75% to 11.00%, following a series of measured cuts in late 2024 and early 2025.
“They are fundamental drivers behind home loan application volumes increasing by 18% in the first quarter of 2025,”
said Rhys Dyer, CEO of the ooba Group.
“The total value of bonds granted also increased sharply (up 22.3%), reflecting a shift toward higher-value property purchases.”
How much homeowners could save
The average home price in South Africa now sits at R1,661,519, according to ooba’s latest oobarometer report. With a modest 0.25% interest rate cut, homeowners with bonds at this price point would save around R856 monthly. Those with loans closer to R5 million stand to save up to R2,576 per month.
Example Savings Based on Bond Values (20-year term, based on latest SARB rates):
| Bond Value | July 2024 (11.75%) | May 2025 (11.00%) | Monthly Saving |
|---|---|---|---|
| R1,000,000 | R10,837 | R10,322 | R515 |
| R1,661,519 | R18,006 | R17,150 | R856 |
| R5,000,000 | R54,185 | R51,609 | R2,576 |
Check the current SARB interest rate
Room for easing despite global risks
According to Koketso Mano, Senior Economist at FNB:
“We still foresee muted inflation over the next few months. Despite a rising trend into 2H25, inflation should remain below the target midpoint – supported by soft oil prices, a recovery in the rand’s value, and weak economic activity.”
In April, headline inflation ticked up slightly to 2.8% y/y, driven mainly by food and beverage prices. However, average fuel prices declined sharply—by 3.2% m/m and 13.4% y/y—offsetting some upward pressure.
“This weak economic environment will weigh on pricing power and sustain space for easier monetary policy,”
Mano adds.
“There is ample space for the committee to continue cutting interest rates.”
Nonetheless, due to global turbulence and local fiscal risks, FNB expects the SARB to adopt a cautious approach in May, likely holding the rate steady for now.
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Global trends offer hope
South Africa’s rate outlook is further bolstered by international moves. At least 15 major central banks—including in the UK, Europe, China, and Mexico—have already cut rates since April. Bank of America anticipates further SARB cuts, predicting the policy rate could drop to 7% by July, driven by low inflation and improving global sentiment.
What you should do now: How to benefit
1. Shop around for better rates
Use home loan comparison services like ooba to access multiple bank offers. This can secure a lower interest rate tailored to your profile.
Expert tip: you don’t have to accept the first rate a bank offers—know your options and negotiate wisely.
2. Maintain a strong credit score
Banks assess your financial health when offering rates. A score above 670 can unlock significant savings.
3. Consider a fixed rate
While variable rates offer flexibility, fixed rates can protect against future hikes. Speak to a financial advisor before locking in.
4. Make extra bond payments
Even small extra repayments reduce the capital portion, saving thousands over the long run.
5. Increase your deposit
Higher deposits reduce bank risk and typically result in lower interest rates on your home loan.
Municipal relief measures for homeowners
Beyond rate cuts, municipalities are also stepping in. The City of Cape Town is set to announce expanded relief measures following public backlash over tariff hikes.
Executive Mayor Geordin Hill-Lewis confirmed the metro would propose “even further relief on monthly bills” amid calls to scrap or soften fixed municipal charges. Public consultation runs from May 28 to June 13.
The bigger picture
While rate cuts are welcome, homeowners must brace for continued cost-of-living pressures, including fuel levy increases and stagnant job growth. Food price relief remains shelved, while municipal services face above-inflation hikes.
Still, lower bond repayments offer a crucial buffer—and a window for households to regain control of their finances.
Positive outlook:
Even if the SARB pauses in May, the outlook for further cuts in 2025 remains favourable. Bondholders should stay alert, act strategically, and use every opportunity to improve affordability.
The SARB’s next interest rate announcement is scheduled for May 29.
*For insights on breaking news affecting SA’s economy, visit NOWinSA’s Economy Section
