The South African Reserve Bank (SARB) has decided to maintain its repo rate at 7.0%, which means the prime lending rate remains stable at 10.5%. This decision brings a sigh of relief to homeowners with variable-rate mortgages, as it prevents an increase in their monthly financial obligations.
For instance, at the current prime rate, a homeowner with a R2 million loan, spread over a 20-year period, is expected to make monthly payments of R19,968. By keeping interest rates steady, borrowers have been spared an additional R335 in monthly repayments that would have been imposed had there been a 25-basis-point rise in rates.
Over the entire duration of the 20-year loan, homeowners are projected to repay around R4.79 million in total, which includes both the principal loan amount and the interest accrued. This decision has been particularly beneficial for those who might have struggled with an increase in their repayment burden.
The decision by the Monetary Policy Committee was not unanimous, reflecting some internal debate. Of its members, four voted in favor of keeping the rates as they are, while two members advocated for a 25-basis-point increase, citing concerns about inflation. This division highlights the ongoing discussions within the committee regarding the best approach to balance economic growth and inflation control.
Looking ahead, the SARB’s next decision on interest rates is scheduled for 23 September 2026, when the committee will once again evaluate the economic landscape and make determinations on the best course of action for the country’s monetary policy.