Which SA bank has the lowest interest rate on home loans?

Article summary

• Each bank has different lending criteria, and some banks might offer you more favourable interest rates than others.
• With the help of a home loan comparison service such as ooba Home Loans, you can apply to multiple banks and compare the packages they offer.
• Applying to multiple banks via a home loan comparison service gives you the best chance of securing the lowest interest rate.

A home loan enables you to fund the purchase of your home with a loan from the bank, making homeownership a realistic option for the many, not just the few.

Of course, the bank reserves the right to reject your home loan application; and even if they approve it, you will have to pay interest on the loan amount.

We recommend that you don’t only apply to one bank. Each bank has different lending criteria, and some banks might offer you more favourable interest rates than others. Many home buyers don’t even realise the benefit of shopping around for the best deal.

The bank with the best interest rate

We cannot provide an accurate list of banks and their interest rates as the numbers are constantly fluctuating.

However, we can help you determine the best interest rates currently on offer by submitting your application to multiple banks.

APPLY with ooba Home Loans and we will enable you to compare interest rates offered by the banks.

In the meantime, here’s some other info you should know:

How do banks determine interest rates?

• The South African Reserve Bank (SARB) sets the prime interest rate, which is the basis for all other interest rates, including home loan interest rates.
• The bank’s interest rate on your home loan is linked to the prime interest rate – either above or below prime, depending on your credit risk profile.

What to know about current interest rates

• As of September 2023, the current prime interest rate is 11.75%.
• There were a number of recent hikes to combat inflation, but experts predict those hikes may be coming to an end.
• This prediction is supported by the fact that the interest rate was kept the same at the September 2023 meeting.

Improve your chances of getting a low interest rate

The interest rate on your home loan depends largely on your financial circumstances. The less of a risk the bank perceives you to be, the lower your interest rate.

Out of the factors you have control over, the credit record is the most important. The bank uses your credit record to determine how much of a risk you are. You can improve your credit score by:

• Paying off debt.
• Pay bills on time.
• Avoid owing more than a third of your gross income on debt.
• Close accounts when you’ve paid the balance owed. This will count in your favour as it will indicate that you are a lower risk.

You can get prequalified with ooba Home Loans to determine your credit record and your likelihood of qualifying for a home loan. This in turn gives you a good idea of how favourable your interest rates will be.

Can you get the best deal by applying directly through your bank?

Applying for a home loan through your private banker may not necessarily get you the best deal, as your banker’s first priority is to get the best deal for the bank.

Furthermore, if the application gets rejected, you will either have to apply to a different bank or wait around until circumstances with you or your bank change.

Meanwhile, the clock is ticking on your Offer to Purchase, and you may end up losing the home you have your heart set on.

How to find the best bank for home loans

Home loan interest rates may vary depending on the lending criteria of the bank, as well as the financial situation of the applicant. As such, it’s difficult to provide a definitive answer to the question of which bank is best for home loans, as it may be different for each applicant.

This is why it helps to employ the services of a home loan comparison service, such as ooba Home Loans. They can apply to multiple banks on your behalf, and help you secure the deal with the lowest interest rate.

We also offer a range of tools that can make the homebuying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.