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

The prime interest rate is the minimum rate at which banks will lend. Here is the current prime interest rate and what it means for homebuyers.

Prime Interest Rate

Article summary

  • The prime interest rate, also known as the lending rate, is the minimum rate banks will charge on a loan.
  • As of May 2023, the prime interest rate is 11.75%.
  • 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 you should take into account when purchasing a home. Lower interest rates mean significant cost savings over the long term and should be your goal when applying for a home loan.

As of May 2023, the prime interest rate is 11.75%.

This follows a succession of interest rate hikes by the South African Reserve Bank.

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 interest rate and what your home loan will cost

  • The interest rate determines what you will pay per month, over and above the monthly repayments of your home loan.
  • The interest rate hikes have made home loans more expensive.
  • To put this in perspective; before the interest rate hike, a R1 000 000 home loan, with a term of 20 years and a R100 000 deposit, would have cost you R2 192 895, with monthly repayments of R9 137.
  • Following the interest rate hike, the same home loan would cost R2 303 488 (a difference of R110 593), with monthly repayments of R9 598.
  • You can use our Bond Calculator to determine how interest rate changes will affect your home loan.

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.

Why all the interest rate hikes?

  • In 2020 the interest rate was at 7%, the lowest in decades. The South African Reserve Bank wanted to keep the economy going during the pandemic period.
  • But since November 2021, there have been a number of interest rate hikes as the SARB adjusts for inflation.

How does this affect the market?

  • We’re still in a buyers’ market despite the interest rate hikes.
  • The property market is competitive and banks are more likely to approve home loans in the current climate.
  • Furthermore, the interest rate remains below the average of 13%-15.5%. 
  • Experts predict the interest rate hikes will come to a stop soon, and may even reverse by next year.

Find out what you’ll pay on your home loan

You can find out what home loan you’ll qualify for by getting prequalified 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 prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.

Get prequalified for a home loan today

DIY with our online prequalification tool, or speak to an expert.


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Estelle Vorster was really helpful in securing the best deal for my home loan, she not only negotiated a lower interest rate she went as far as securing 50% discount on the transfer costs.

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