The current repo rate (+ 5 things you should know)

Article summary

• The repo rate affects the interest rate at which your bank will lend, which in turn affects the cost of your home loan.
• The repo rate was cut to 7.25% in May 2025, marking the fourth consecutive reduction since September 2024.
• This makes the prime lending rate 10.75%, creating significant savings opportunities for homeowners.
• Experts predict further cuts could bring rates down to 10.50% by the end of 2025.

If you’re applying for a home loan, the repo rate is one of the most important factors to consider. Here’s what you need to know about the current repo rate environment and how it’s creating exciting opportunities for homebuyers.

What is the South African repo rate

• The current repo rate is 7.25%.
• This makes the prime interest rate 10.75%

The remarkable repo rate cutting cycle

After more than two years of persistent interest rate increases to combat inflation, South Africa has entered a historic rate cutting cycle that’s transforming the property market landscape.

The South African Reserve Bank has delivered four consecutive rate cuts:

• September 2024: First cut in years – from 8.25% to 8.00%
• November 2024: Second cut – from 8.00% to 7.75%
• January 2025: Third cut – from 7.75% to 7.50%
• May 2025: Fourth cut – from 7.50% to 7.25%

This sustained easing cycle reflects South Africa’s success in taming inflation, which fell to just 2.8% in April 2025, well below the Reserve Bank’s 3-6% target range. With economic growth remaining sluggish at a forecast 1.2% for 2025, the Reserve Bank has shifted from a restrictive to an accommodative policy stance.

Looking ahead: Experts predict at least one more 25 basis point cut in 2025, potentially bringing the prime lending rate down to 10.50% by year-end.

Note: While interest rates are becoming more predictable, there doesn’t have to be uncertainty about your bond payments. Use our Bond Repayment Calculator to determine your monthly repayments and budget with confidence.

What this means for first-time homebuyers

Expert predictions and current market conditions make this an exceptional time for first-time buyers to step onto the property ladder. Lower interest rates mean:

• Higher approval chances: Banks are more willing to lend in a declining rate environment
• Better affordability: Monthly repayments are significantly lower than they were in 2024
• 100% home loans become viable: Reduced rates make deposit-free options more accessible
• Future protection: Locking in current rates protects against potential future increases

The combination of contained inflation, accommodative monetary policy, and improved affordability creates conditions we haven’t seen in years.

5 Things you should know about the repo rate:

1. The prime lending rate will always be higher than the repo rate

The repo rate is the rate at which the South African Reserve Bank lends to commercial banks. Banks then lend to consumers at the prime lending rate, which is typically 3.5 percentage points higher than the repo rate. This margin covers the banks’ operational costs and profit requirements. Currently, with the repo rate at 7.25%, the prime lending rate sits at 10.75%.

2. The repo rate directly affects your home loan

The repo rate influences the prime interest rate, which in turn determines your home loan interest rate. When the repo rate decreases, as we’ve seen with the recent cuts, your monthly bond repayments decrease accordingly if you have a variable-rate home loan. This direct relationship means every repo rate cut puts money back in your pocket immediately.

3. More rate cuts are expected in 2025

The current easing cycle isn’t over yet. With inflation contained at 2.8% and economic growth remaining subdued, experts predict the Reserve Bank will continue cutting rates gradually. Most economists forecast at least one more 25 basis point cut in 2025, potentially bringing the prime rate to 10.50% by year-end. This measured approach ensures monetary policy supports economic recovery while maintaining price stability.

4. Fixed-rate vs variable-rate loans in a declining rate environment

When rates are falling, variable-rate loans typically offer better value as you automatically benefit from each rate cut. However, fixed-rate loans can provide budgeting certainty, though you’ll miss out on further rate reductions. In the current environment, many homebuyers are choosing variable rates to maximise savings from the ongoing rate cuts. However, fixed rates might make sense if you prefer payment certainty or believe rates have bottomed out.

5. A home loan comparison service maximises your rate advantage

Regardless of the repo rate environment, working with a bond originator like ooba Home Loans can secure you the best possible interest rates. By submitting your application to multiple banks simultaneously, we help you:

• Access competitive rates from all major lenders
• Negotiate better terms based on your credit profile
• Secure rates as close to prime as possible
• Take full advantage of the current rate environment

Our expertise becomes even more valuable in a changing rate environment, ensuring you don’t miss out on the best available deals.

Find out what you can afford: Pre-approval

The improved interest rate environment means you might qualify for more than you think. Getting pre-approved with ooba Home Loans provides a realistic assessment of your borrowing capacity using current rates.

Pre-approval gives you:

• Clarity on your budget using the latest rates
• Competitive advantage when making offers
• Confidence in your home-buying journey
• Protection against rate increases during your property search

You can get pre-approved by speaking to one of our expert consultants or using our free, online Bond Indicator tool.

Get pre-approved for a home loan today

Take advantage of the best interest rate environment in years. Get pre-approved today with our online pre-qualification tool, or speak to an expert who can guide you through your options.