Interest Rate Predictions for 2025 – What Homebuyers Need to Know

Article Summary:

• The SARB cut interest rates four times between September 2024 and May 2025, reducing the prime lending rate from 11.75% to 10.75%
• The latest cut of 25 basis points was announced on 29 May 2025, effective 30 May 2025
• Experts predict further cuts through 2025, with rates potentially reaching 10.50% by year-end
• These cuts represent the first sustained easing cycle in years, creating historic opportunities for homebuyers

Interest rates are one of the most important factors you need to research before applying for a home loan. They determine what you’ll pay over and above the monthly repayments on your home loan, making them crucial to your affordability and long-term financial planning. Interest rates can fluctuate or remain stable throughout the year, depending on market conditions. Interest rate predictions have a significant bearing on whether it’s a good time to enter the property market and right now, the signals couldn’t be more encouraging.

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 and credit profile. Fortunately, interest rate predictions look exceptionally positive for 2025, with homebuyers already benefiting from substantial rate reductions. We explain what this means for your homeownership dreams.

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 aggressive hikes over the next couple of years in an effort to combat inflation. However, by 2023, experts began predicting that the hiking cycle would end. This prediction proved accurate when the SARB opted to leave rates unchanged in September 2023, maintaining the prime lending rate at 11.75%.

Experts then predicted interest rate cuts would begin in late 2024, based on expectations of contained inflation and sluggish economic growth. These predictions have been remarkably accurate, as the SARB has delivered four consecutive cuts:

The Rate Cut Timeline:

• September 2024: First cut in years – 11.75% to 11.50%
• November 2024: Second cut – 11.50% to 11.25%
• January 2025: Third cut – 11.25% to 11.00%
• May 2025: Fourth cut – 11.00% to 10.75%

The latest cut was announced on 29 May 2025 and became effective on 30 May 2025. The Monetary Policy Committee voted 5-1 in favour of the 25 basis point reduction, with one member actually preferring a larger 50 basis point cut. 

As of June 2025, the repo rate stands at 7.25%, making the prime lending rate 10.75%.

Interest Rate Outlook for 2025

The positive news for homebuyers is that economists expect this easing cycle to continue through 2025, although the SARB will likely maintain their cautious approach of 25 basis point cuts at each meeting. According to the Bureau for Economic Research (BER), the SARB will “likely continue to tread carefully going forward,” but the underlying economic conditions support further rate reductions.

Economic Drivers Supporting Rate Cuts:

• Inflation below target: April 2025 inflation reached just 2.8%, well below the SARB’s 3-6% target range
• Core inflation contained: At 3.0%, sitting at the bottom of the target range
• Sluggish economic growth: 2025 GDP forecast revised down to 1.2%
• Global factors: Stronger rand and contained international inflation pressures

Current expert predictions suggest the easing cycle could deliver another 25-50 basis points of cuts in 2025, potentially taking the prime lending rate as low as 10.25% by year-end. Bloomberg Africa economist Yvonne Mhango and other leading economists anticipate this gradual easing will continue, representing a fundamental shift from the SARB’s previous restrictive monetary policy stance to a more accommodative approach.

What About Inflation?

The inflation outlook remains highly supportive of continued rate cuts. According to the BER’s latest inflation expectation survey, analysts, business leaders, and trade union officials expect consumer inflation to stabilise around the 4.5% target midpoint through 2026.

With April 2025 inflation at just 2.8%, the lowest level in years, the SARB has significant room to continue supporting economic growth through lower interest rates without compromising their inflation mandate. This contained inflation environment, combined with declining fuel costs and a stronger rand, creates an ideal backdrop for homebuyers looking to enter the market.

What Does This Mean for Homebuyers in 2025?

Simply put, we’re witnessing a historic opportunity for South African homebuyers. This sustained rate-cutting cycle, the first in years, creates multiple advantages:

Immediate Benefits:

• Dramatically improved affordability: Lower rates mean you can qualify for larger loans or enjoy lower monthly payments
• Reduced monthly burden: Existing homeowners with variable-rate loans are already seeing monthly payment reductions
• Better buying power: Your budget stretches further in today’s rate environment

Market Dynamics:

• Increased competition between banks: Lenders are competing aggressively for market share, leading to better deals for consumers
• Property market stimulus: Lower rates are expected to boost property market activity after sluggish sales in recent years
• Investment opportunities: Buy-to-let investors can benefit from improved rental yields relative to financing costs

For first-time homebuyers especially, this represents a golden window. The combination of lower rates and competitive lending conditions means homeownership is more accessible than it’s been in years.

Get the Best Deal on Your Interest Rates

While the overall rate environment has improved dramatically, individual rates still vary significantly between banks and borrowers. This is where ooba Home Loans becomes your most valuable ally.
We submit your application to multiple banks simultaneously. Different lending criteria amongst banks means some may offer more favourable interest rates than others, even in the current environment. Our relationships with all major lenders including FNB, Standard Bank, Nedbank, and Absa, ensure you get access to the most competitive rates available.

Rather than accepting the first offer you receive, let us negotiate on your behalf to secure the lowest possible rate for your specific situation.

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 and overall financial profile. Even in today’s favourable rate environment, your individual circumstances significantly impact the rate you’ll receive. 

You can discover your potential rate and loan amount by getting pre-approved with ooba Home Loans. Pre-approval provides a comprehensive assessment of what you’ll be able to afford, the rate you’re likely to receive, and importantly, gives you a competitive advantage when making offers on properties. With our 85% approval rate for pre-approved applications, you can enter the market with confidence, knowing exactly what’s possible.

You can get pre-approved by contacting one of our expert consultants or by using our free, online pre-approval tool, the Bond Indicator. Both options give you the insights you need to take advantage of this historic rate environment.

Ready to turn your homeownership dreams into reality? The market conditions couldn’t be better, and with further rate cuts expected through 2025, there’s never been a better time to take that first step.

Get Pre-Approved for a Home Loan Today

Get pre-approved with our online pre-approval tool, or speak to an expert today.