Interest rate announcement: More good news for SA homeowners in January?

The South African Reserve Bank’s (SARB’s) monetary policy committee (MPC) will meet for the first time in 2025 on Thursday, 30 January.

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There is widespread optimism that the first meeting of the year could well bring more good news for South Africa’s homeowners and those looking to enter the property market for the first time.

REMINDER

As a reminder, following the most recent SARB meeting in November 2024, the repo rate dropped to 7.75% while the prime lending rate now stands at 11.25%.

Economists appear to be in agreement that lower-than-anticipated inflation in recent months gives the SARB room to cut rates by 50 basis points by March 2025.

That would indeed be welcome news to those South Africans in debt.

It’s unlikely January’s meeting will result in the full 50 basis point cut, a more likely scenario would be another 25 basis point reduction this month, followed by something similar at March’s meeting.

What would a 25 basis point cut mean in monetary terms?

By way of an example (see graph below), should the interest rate be cut by 25 basis points, a 20-year repayments at the new prime (11%) on the average house bond in South Africa of R1 458 924 will now cost R15 059 per month to finance.

That represents a monthly saving of R249 per month.

Over the course of 20 years (240 months), that equates to a total saving of R59 760 – on the (unlikely) assumption that there are no further interest rate changes during that period.

But here are the scary numbers …

To finance a R1 458 924 bond over 20 years at the new prime lending rate (11%) will NOT cost R1 458 924.

In fact, it will cost a staggering R3 614 123.

Do the sums yourself:

R15 059 x 240 months = R3 614 160 (give or take a few rands)

Who are the SARB?

The South African Reserve Bank’s (SARB’s) monetary policy committee (MPC) meets every second month to announce changes – if any – to the country’s repo and prime lending rates.

The meetings take place in January, March, May, July, September and November – and always on a Thursday at 15:00.

Currently, the committee comprises of six people, with Lesetja Kganyago holding the position of governor of the SARB.

Month	Date
January	30 January
March	20 March
May	29 May
July	31 July
September	18 September
November	20 November

Monthly bond repayment table

The South African website’s table below compares the current monthly bond repayments on various bond values over a 20-year period assuming no deposit and repayments at prime, to the expected cost after a possible 25 basis point cut in January – and the monthly saving that entails:

Bond	Current (11.25%)	New (11%)	Saving
R750 000	R7 869	R7 741	R128
R800 000	R8 394	R8 258	R136
R850 000	R8 919	R8 774	R145
R900 000	R9 443	R9 290	R153
R950 000	R9 968	R9 806	R162
R1 000 000	R10 493	R10 322	R171
R1 458 924	R15 308	R15 059	R249
R1 500 000	R15 739	R15 483	R256
R2 000 000	R20 985	R20 644	R341
R2 500 000	R26 231	R25 805	R426
R3 000 000	R31 478	R30 966	R512
R3 500 000	R36 724	R36 127	R597
R4 000 000	R41 970	R41 288	R687
R4 500 000	R47 217	R46 448	R769
R5 000 000	R52 463	R51 609	R854

To rent or buy (and pay off a bond): What do YOU do?

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