When the news reports that the Reserve Bank has changed the repo rate, it can sound like something that only matters to economists and banks. But if you have a home loan, or you’re planning to get one, that announcement can affect your monthly budget directly.
Here’s what the repo rate is, how it reaches your bond, and how to plan around it.
What is the repo rate?
The repo rate is the interest rate at which the South African Reserve Bank (SARB) lends money to commercial banks. The SARB’s Monetary Policy Committee reviews it at scheduled meetings during the year, mainly as a tool to manage inflation.
On 23 September 2026, the SARB increased the repo rate by 25 basis points (0.25 percentage points) to 7.25%.
How the repo rate reaches your home loan
The repo rate influences the prime lending rate, the benchmark rate banks use to price many loans. In South Africa, prime has typically been set at 3.5 percentage points above the repo rate. Following the September 2026 increase, prime moved to 10.75%.
Most home loans are priced relative to prime: at prime, or a little above or below it, depending on your credit profile, deposit and the bank’s offer. If your bond has a variable rate:
- When the repo rate rises, prime usually rises, and your monthly repayment may go up.
- When the repo rate falls, prime usually falls, and your repayment may come down.
The exact impact depends on your loan amount, the remaining term, the rate your bank has given you and whether your rate is variable or fixed.
What a small change can mean in rand terms
Small percentage changes can still make a noticeable difference. As a simple illustration, take a R1 million bond over 20 years:
| Interest rate | Approximate monthly repayment |
|---|---|
| 10.75% (prime after September 2026) | about R10 150 |
| 11.00% (prime + 0.25%) | about R10 320 |
| 11.75% (prime + 1%) | about R10 840 |
Illustrative figures only, calculated on a standard repayment basis. They exclude bank fees, insurance and other costs. Your actual repayment will depend on your loan terms.
A 0.25 percentage point change adds roughly R170 a month in this example. A full 1 percentage point move adds close to R700 a month, or over R8 000 a year.
How to plan if you’re thinking of buying
Use the current rate as your starting point. Base your affordability calculations on today’s prime rate and the rate you’re likely to be offered.
Stress-test your budget. Recalculate your repayment at one or two percentage points higher. If that figure would leave you struggling, consider a lower purchase price or a bigger deposit.
Build a buffer. Savings set aside for rate increases give you breathing room. Some homeowners also pay a little extra into their bond when rates are lower, which can reduce the loan balance faster.
Ask about your options. Some lenders offer fixed-rate options for a set period, which can give you certainty but may come at a higher starting rate. Ask your bank or bond originator to explain the trade-offs.
