Experts say repo rate cut expected to hand property market a welcome boost
The South African Reserve Bank (SARB)’s monetary policy committee (MPC) unanimously voted to cut the repo rate on Thursday, after its monthly meeting in July.
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JOHANNESBURG - Leaders in the property sector said the latest 25 basis point cut in the repo rate is expected to hand the country’s property market a welcome boost.
The South African Reserve Bank (SARB)’s monetary policy committee (MPC) unanimously voted to cut the repo rate on Thursday, after its monthly meeting in July.
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Inflation has been consistently within or below the central bank’s 3% to 6% target range, even hitting 2.8% in April and May before a slight uptick to 3% in June.
The currency has remained fairly stable against the dollar despite global uncertainty caused by threats of higher United States (US) tariffs.
The cumulative rate cut of 1.25% since the cycle started will make home loans more affordable, and property buyers will find it slightly easier to qualify, opening more doors to homeownership.
The repayment on a bond of R1 million over 20 years will now be reduced by around R168.
Homeowners with a R2 million bond will save almost R350.
Consumers on the higher end of the spectrum will save close to R900 on repayment costs for a R5 million bond over 20 years.
As a result of the 25bps rate cut, mortgage repayments will reduce by:
- R750 ,00 bond – from R7,614 to R7,488, saving R126
- R900,000 bond – from R9,137 to R8,985, saving R152
- R1 000,000 bond – from R10,152 to R9,984, saving R168
- R1 500,000 bond – from R15,228 to R14,976, saving R252
- R2 000,000 bond – from R20,305 to R19,968, saving R337
- R2 500,000 bond – from R25,381 to R24,960, saving R421
- R3 000,000 bond – from R30,457 to R29,951, saving R506
- R5 000,000 bond – from R50,761 to R49,919, saving R842
- Based on a 20-year repayment period at the prime rate.
On a R1 million home loan, monthly repayments have decreased by R840 per month.
The CEO of Jawitz Properties, Herschel Jawitz, said the reprieve on the cost of servicing debt, including car and credit card repayments, would continue to have a positive effect on consumer confidence, which is also a key driver of the residential market.
"Residential property is a long-term investment and relies on buyers feeling more positive about their future financial well-being. Since the rate-cutting cycle started in 2024, we have seen a recovery in buyer activity and demand for residential property. This rate cut will continue to sustain this increase in demand, which, over time, will start to firm up property prices, which is good news for sellers."
While he also welcomes the impact on disposable income for homeowners and buyers, the chairman of the Seeff Property Group, Samuel, said bolder rate cuts were still needed.
"Since the interest rate, [even after the latest cut], is still higher compared to January 2020, before the onset of the COVID pandemic. We continue to urge the bank to step up with more cuts now while inflation is contained, and the currency stable."