The interest rate hike: What your bond costs now

Article summary

• The home loan interest rate determines how much you’re going to have to pay the bank, above and beyond the actual value of the home you are purchasing.
• When applying for a home loan, one of your most important goals should be to secure the lowest home loan interest rate possible.
• As of July 2026, the prime interest rate is 10.50%, following a hike in May 2026.
• Some ways to lower your interest rate include paying a big deposit on the home loan, and applying to multiple banks to secure the best deal.

Securing a home loan is a significant step on the way to owning your dream home; and the home loan interest rate is the primary factor you should be looking at when comparing home loan packages.

With that in mind, here’s everything you need to know about home loan interest rates in 2026.

What is the prime lending rate, and how does it affect interest rates?

The prime lending rate is based on the repo rate, which is set by the South African Reserve Bank when they meet every few months.

The prime lending rate is what the banks add to the repo rate to secure a profit.

Your personal interest rate will then be what the bank adds to the prime lending rate depending on your financial situation.

How much higher than the prime lending rate will your home loan interest rates be?

This depends on your financial situation. The bank determines how much of a risk you are and charges interest rates accordingly.

You can reduce the risk by having a good credit record and putting a larger deposit on the home loan.

Interest rate cuts in 2026

The last few years have seen a series of interest rate hikes as the South African Reserve Bank sought to combat inflation.

The period following COVID saw a succession of interest rate hikes as the South African Reserve Bank sought to combat inflation, but in 2023 experts predicted the interest rate hikes would cease. This prediction was borne out as the SARB opted to leave the interest rate unchanged in their September 2023 meeting, keeping the prime lending rate at 11.75%.

Experts further predicted interest rate cuts on the horizon. Sure enough, a string of interest rate cuts followed in 2024 and 2025.

However, geopolitical pressures and rising inflation forced the SARB to implement a 25 basis point hike in 2026. This leaves the rate at its current level of 10.50%, following the latest hike in May 2026.

What will you pay following the interest rate hike?

The current rate still brings significant savings from 2023 levels, as illustrated in the below chart:

Home loan value	Monthly repayment at 11.75%	Monthly repayment at 10.50%	Monthly savings	3-year savings
R1 million	R9 753	R8 985	R768	R27 648
R2 million	R19 507	R17 971	R1 536	R55 296
R3 million	R29 260	R26 956	R2 304	R82 944
R4 million	R39 013	R35 942	R3 071	R110 556
R5 million	R48 767	R44 927	R3 840	R138 240

How to lower your home loan interest rate

Aside from repo rate cuts by the SARB, there are things you can do to secure lower interest rates.

1. Save up for a large deposit

If at all possible, raise the biggest deposit that you can before buying a home, or save up for a large first payment while you are waiting for the transfer to go through. And, the bigger your deposit, the better your chances of getting a lower interest rate and reducing the total interest charged on your bond.

You can use our Deposit Savings Calculator to receive a guideline for raising funds for your deposit.

2. Clean up your credit score

As far as your bank is concerned, the credit score is a big number above your head that tells them how much of a risk you are.

Through various calculations based on your transactional records, the bank will arrive at a three-digit number ranging between 0 and 999.

Any improvement in your credit score can only work in your favour. You can improve your credit record by paying off outstanding debt, and ensuring you pay your bills timeously.

What is a good credit score?

A credit record of at least 610+ is required for a chance of home loan approval.

Here’s a more detailed breakdown (based on figures from TransUnion):
767 to 999. Excellent.
681 to 776. Good.
614 to 680. Favourable.
583 to 613. Average.
527 to 582. Below average.
0 to 526. Poor.

You can find out your credit record by getting pre-approved with ooba Home Loans (find out more on that below).

3. Extend the term of your bond

Some people consider taking their bond over 30 years rather than the more standard 20. This reduces their monthly repayments but ultimately increases the amount that they pay back because the interest is charged over a longer term.

4. Make extra repayments whenever you can

If you’re not struggling to make the monthly repayments, it’s always better to try to pay as much as possible into your bond each month.

Interest on a home loan is calculated daily and then billed monthly, so if you make additional payments to your home loan, you will reduce the outstanding balance as well as the interest that you pay.

Find out how much you can save using our Extra Payments Calculator.

5. Shop around for the best deal

Since the lending policy varies from one bank to another, you may be able to find a bank with a home loan package especially suited to your particular financial situation.

An expert home loan comparison service like ooba Home Loans can assist in this regard, by submitting your application to multiple banks, and negotiating with the banks on your behalf.

You can then compare the deals offered by the banks and choose the one with the lowest interest rate.

So apply with ooba Home Loans to get the best deal on your bond. We have an average interest concession rate of -0,67%.

Getting pre-approved for a home loan

As mentioned above, getting pre-approved will assess your credit record. Using this information, you can provide a solid estimation of how much you can afford on your home loan, taking current interest rates into account.

This information allows you to house hunt within your range, secure in the knowledge that you will likely gain approval for a home loan.

You can get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.