Interest Rate Predictions for 2026 – What Homebuyers Need to Know

Article summary:

• The SARB left the interest rate unchanged at 10.25% at their first meeting of the year in January.
• However, in May 2026 they raised by 25 basis points to 10.50%.
• Forecasts show the prime rate could potentially drop slightly near the end of 2026, depending on inflation, global conditions, and local growth.

Interest rates are one of the most important factors you need to research before applying for a home loan. They determine what you will pay, over and above the monthly repayments on your home loan.

Interest rates can fluctuate or remain stable throughout the year, depending on market conditions. Interest rate predictions have a bearing on whether it’s a good time to enter the market.

The main factor affecting interest rates is the repo rate, which is set by the South African Reserve Bank. This determines the prime lending rate, which is the minimum banks will charge for loans. What they add to the prime lending rate, in your case, depends on your financial situation.

Interest rate predictions have shifted considerably for the second half of 2026. We explain.

Note: Find out what you’ll likely pay in interest rates by having your financial situation assessed. You can do this by getting pre-approved with ooba Home Loans. We assess your financial situation and provide a solid estimate of what you can afford on your home loan.

Recent changes to the interest rate

Interest rates reached a record low during the pandemic as the SARB attempted to stimulate the market, but this was followed by a series of hikes over the next couple of years in an effort to combat inflation.

However, in 2023, experts predicted that the hikes would cease. This prediction was borne out in September 2023 when the SARB opted to leave the interest rate (at the time 11.75%) untouched.

Experts then predicted interest rate cuts in late 2024. Investec chief economist Annabel Bishop based this on expectations for the US market and said in early 2024 that an interest rate cut in September 2024 is likely. “Later than expected, but still encouraging”.

A succession of cuts followed, with the most recent being in November 2025. However, in May 2026 the SARB opted to increase the interest rate by 25 basis points to manage rising inflation. As a result, the rate stands at 10.50% (as of July 2026).

Expert predictions for the remainder of 2026

Forecasts for the second half of 2026 are strongly dependent on global economic factors:

• A small cut may occur in November if global inflation cools.
• Market analysts caution that any further 2026 changes will depend on global interest-rate cycles, especially decisions by the US Federal Reserve.
• Overall, the remainder of 2026 is expected to feature either a small cut or stable rates.

In short: 2026 still offers opportunity for homebuyers, continuing the affordability improvements that began in late 2024.

What you’ll save on your home loan

Here’s what you’ll still save on a home loan after the May interest rate hike (assuming a 20-year term and 10% deposit).

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 994
R4 million	R39 013	R35 942	R3 071	R110 556
R5 million	R48 767	R44 927	R3 840	R138 240

What about inflation?

The South African Reserve Bank (SARB) — along with independent analysts — has adjusted headline inflation upwards to around 4.4% in 2026, assuming the stabilisation of administered prices, fuel, and electricity costs.

Lower and stable inflation would improve the possibility that the low-rate environment — triggered by recent interest-rate cuts — can persist.

Implication for Homebuyers:

If inflation remains in the 3.5%–4.5% range, and the central bank remains comfortable with price stability, then further interest-rate cuts (or at least no more hikes in 2026) are plausible. That scenario would help keep monthly repayments and long-term borrowing costs more affordable — a strong incentive for buyers to lock in home loans now or later in 2026.

Get the best deal on your interest rates

ooba Home Loans is the best resource for achieving significant savings on your interest rates.

We submit your application to multiple banks. Lending criteria amongst banks means that some may grant more favourable interest rates than others.

So apply with ooba Home Loans to get the lowest interest rates possible on your bond.

Find out what you can save by getting pre-approved

The most important factor banks assess when determining your interest rates is your credit record. This is a three-digit summation of your financial situation.

You can find out your credit record by getting pre-approved with ooba Home Loans. Pre-approval provides an estimation of what you’ll be able to afford on your 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.