The Reserve Bank’s decision this week to increase the repo rate by 25 basis points and effectively push the prime lending rate up to 10,50% will clearly place additional pressure on household budgets – but should not cause prospective buyers to abandon their home ownership plans.
That’s the word from Stephen Whitcombe, MD of the FIRZT Property Group, who says that the increase underlines the need for home buyers to approach the market strategically, particularly if economists are correct in saying that rates may not start declining again until next year.
“The reality is that if rates continue to edge upwards, or even if they stay the same now, it becomes even more important than before to secure the most competitive home loan, and for prospective buyers to engage with a reputable mortgage originator such as BetterBond before signing an offer to purchase.
“A good originator will negotiate aggressively with multiple banks on a buyer’s behalf and can often secure a more favourable lending rate than a buyer may obtain independently. And even a modest rate concession can result in meaningful savings over the life of a home loan.”
He says the latest increase also provides an opportunity for existing homeowners to reassess their financing arrangements. “If you have been servicing your home loan consistently for several years and have built up a strong payment history, now may be a good time to speak to your bank about renegotiating your interest rate. They may well be willing to offer improved terms to retain a good client.”
For homeowners with a 20-year bond of R1m, the 0,25% increase translates into an approximate monthly repayment increase of around R165 to R175, while a R2m bond could see repayments rise by roughly R330 to R350 per month.
Meanwhile, says Whitcombe, it is important to keep the interest rate increase in perspective. “Any increase in borrowing costs is understandably concerning for consumers, especially at a time when many households are still under financial pressure. But the prime lending rate remains significantly below the high of 11,75% seen in 2024, and many consumers have thankfully been able to reduce their debts due to the interest rate decreases through 2025.
“Consequently, we believe that aspiring homeowners should resist the inclination to abandon their property goals now, particularly if they are younger buyers entering the market for the first time.
“Johannesburg especially offers some of the best relative property value in South Africa at the moment, and for young professionals and first-time buyers especially, there are still opportunities to secure good-quality homes in well-located suburbs at price points that would be difficult to find in many other major metros.”
He notes that Johannesburg’s combination of comparatively accessible pricing, lifestyle offerings, and strong transport links means buyers who take a long-term view can still enter the market sensibly, despite modest interest rate increases.
“And property remains one of the most effective long-term wealth creation tools available to ordinary South Africans. Waiting indefinitely for the ‘perfect’ interest rate environment can mean missing really good opportunities, particularly in markets where value is still strong.”
So rather than seeing the latest increase as a reason to retreat, Whitcombe says, consumers should focus on preparation, affordability planning and seeking professional advice. “It is worth remembering that interest rate cycles come and go, but property ownership requires a long-term view. And for well-prepared buyers, Johannesburg’s value-driven market currently presents some very meaningful prospects.”
