The current prime interest rate + what your home loan will cost

Article summary

• The prime interest rate, also known as the lending rate, is the minimum rate banks will charge on a loan.
• As of February 2025, the prime lending rate is 11.0, following several cuts.
• You can get a lower interest rate by maintaining a good credit record and applying for a home loan with a home loan comparison service.

The interest rate is one of the primary factors for home loans. Lower interest rates mean significant cost savings over the long term and should be your goal when applying for a home loan.

As of February 2025, the prime lending rate is 11.0%.

This follows a 25 point cut by the South African Reserve Bank in September 2024 — the first interest rate cut since 2020; followed by additional cuts in November and January.

Use our Bond Calculator to determine what you will pay on your home loan with the current prime interest rate.

What does prime interest rate mean?

• The minimum interest rate at which banks are willing to lend. This will be the repo rate plus what the bank charges to make a profit.
• If you apply for a home loan, your personal interest rate will be the prime interest rate plus what the bank adds on, which in turn will be determined by how much of a risk they consider you to be.
• A solid financial situation on your part (reflected in your credit score) will earn you lower interest rates.

The recent interest rate cut

• The recent interest rate cuts are a positive sign for the South African property market.
• The past few years have seen a succession of interest rate hikes due to inflation, but in September 2023, the interest rate was left untouched.
• Experts predicted cuts on the horizon, and those predictions have come to fruition.
• 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.

What does the interest rate cut mean for your home loan?

Cuts result in significant long-term savings.

When you take into account that the interest rate was 11.75% for most of 2024, the recent cuts make 2025 a year for substantial savings.

Here’s what you’ll save on a home loan in 2025 versus the 2024 interest rate (assuming a 20-year term and 10% deposit).

Loan value	Monthly repayment at 11.75%	Monthly repayment at 11.00%	Monthly savings	Total savings
R1 million	R9 753	R9 290	R463	R111 280
R2 million	R19 507	R18 579	R928	R222 561
R3 million	R29 260	R27 869	R1391	R333 841
R4 million	R39 013	R37 159	R1854	R445 121
R5 million	R48 767	R46 448	R2319	R556 401

Can I prevent interest rates from affecting my home loan?

• Yes, by applying for a fixed-rate home loan as opposed to a variable-rate home loan.
• Fixed interest rates expire after the initial agreed period, after which you will either have to revert to variable interest rates or negotiate a new fixed rate with the bank.
• Fixed interest rates have pros and cons. You can budget with more accuracy, but you won’t benefit when the SARB lowers the interest rate.

How can I get lower interest rates?

• By maintaining a good credit record.
• By applying with a home loan comparison service such as ooba Home Loans. We submit your application to multiple banks, allowing you to compare deals and choose the one with the lowest interest rate.

Find out what you’ll pay on your home loan

You can find out what home loan you’ll qualify for by getting pre-approved with ooba Home Loans.

We also check your credit record during the prequalification process, so you can determine how that will affect your interest rate.

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