Interest Rate Predictions for 2025 – What Homebuyers Need to Know

Article summary:

• In September 2024, the SARB cut interest rates for the first time in years. This was followed by another cut in November 2024, making the interest rate 11.25%.
• Experts predict more interest rate cuts for 2025, although they expect the SARB will only cut 25 basis points at a time.
• The interest rate may be as low as 10.50% by the end of 2025.

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.

Fortunately, interest rate predictions look positive for 2025. We explain.

Note Find out what you’ll likely pay on 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”.

Again, predictions came true as the SARB reduced the interest rate to 11.50% in their September 2024 meeting, the first cut in years.

In November, the SARB again cut the interest rate by 25 basis points.

Consequently, as of January 2025, the interest rate is 11.25%.

What you save on interest rates as a result

Here’s what you’ll save on a home loan as a result of the September and November interest rate cuts (assuming a 20-year term and 10% deposit).

Loan value	Monthly repayment at 11.75%	Monthly repayment at 11.25%	Monthly savings	Total savings
R1 million	R9 753	R9 443	R310	R74 414
R2 million	R19 507	R18 887	R620	R148 829
R3 million	R29 260	R28 330	R930	R223 243
R4 million	R39 013	R37 773	R1240	R297 657
R5 million	R48 767	R47 217	R1550	R372 071

Interest rates in 2025

Economists expect the SARB to be cautious in the sense that there’s unlikely to be more than 25 basis points cut at a time.

According to the Bureau for Economic Research (BER), the SARB will “likely continue to tread carefully going forward”.

However, home buyers will be pleased to know that interest rate cuts are expected, even if it’s only 25 points at a time.

According to businesstech.co.za, “the economists anticipate the easing cycle to carry another 75 basis points of cuts in 2025, taking the repo rate to 7.00% and the prime lending rate to 10.50%”.

They add “While the forecast sees rates easing further in future, stabilising above 7%, this implies room for another 50 basis points of cuts”.

Bloomberg Africa economist Yvonne Mhango predicts another 25bp cut in January 2025, taking the repo rate to 7.5% (making the prime lending rate 11.00%).

What about inflation?

According to businesstech, “the BER’s latest inflation expectation survey showed that analysts, business people and trade union officials, on average, think that consumer inflation will stabilise at the 4.5%-target midpoint in 2024. They foresee it to be around this level from 2024 to 2026”.

“Amidst the cuts in inflation, the BER said that further interest rate cuts remain on the cards for South Africa – for now”.

What does this mean for homebuyers in 2025?

It means significant savings. In summation, it’s an excellent time for budding investors to get on the property ladder and for first-time homebuyers to take the plunge.

Competition between banks means they’ll be more likely to grant more favourable interest rates on home loans, ensuring additional savings for homebuyers.

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.