If you have a home loan, or you’re about to apply for one, your repayment just went up. Today the South African Reserve Bank raised interest rates for the second time this year. The good news is that the increase is small, it’s predictable, and there are practical steps you can take right now to stay in control of your budget.
Here’s what changed, what it costs you each month, and what to do next.
What did the Reserve Bank announce today?
The Monetary Policy Committee (MPC) unanimously decided to increase the policy rate by 25 basis points to 7.25%, effective 25 September. This means the prime lending rate now sits at 10.75%.
A 25 basis point move is the same as 0.25%. Most South African home loans are priced in relation to prime (for example, “prime minus 0.5%” or “prime plus 1%”), so when prime moves, your bond rate moves with it.
This is the second hike in 2026. In May, the MPC raised the repo rate by 25 basis points, taking it to 7% from 6.75%, which lifted prime to 10.5%. Put simply, prime has gone from 10.25% at the start of the year to 10.75% today.
Why did interest rates go up?
The short answer is fuel prices and inflation. The SARB’s decision was made in the face of the Middle East conflict, the oil price increase and the inflationary fears it has led to. Governor Lesetja Kganyago pointed to the escalating Middle East conflict, interruptions to oil exports from Saudi Arabia due to fighting in Yemen, and the ongoing Russia-Ukraine war as key factors driving inflation higher.
Inflation is creeping up at home too. Stats SA reported that inflation edged higher to 4.4% in August, from 4.3% in July, and the SARB projects headline inflation could reach 5% before slowing to 3% at the end of 2027. Since the Reserve Bank now targets 3% inflation, it raised rates to stop rising prices from becoming entrenched.
How much more will I pay on my home loan?
For a typical 20-year bond at prime, the increase works out to roughly R168 more per month for every R1 million you owe. A R1.5 million home loan is set to cost about R253 more a month.
Here’s a rough guide, based on a 20-year term at prime:
| Bond amount | At 10.5% (before) | At 10.75% (now) | Extra per month | Extra vs January (10.25%) |
|---|---|---|---|---|
| R750,000 | R7,488 | R7,614 | R126 | R252 |
| R1,000,000 | R9,984 | R10,152 | R168 | R336 |
| R1,500,000 | R14,976 | R15,228 | R253 | R504 |
| R2,000,000 | R19,968 | R20,305 | R337 | R672 |
| R3,000,000 | R29,951 | R30,457 | R505 | R1,008 |
These figures are estimates only. Your actual repayment depends on your rate relative to prime, your remaining term and your outstanding balance. Use our Repayment Calculator for your own numbers.
When will my repayment change?
If you have a variable-rate bond, your bank will typically adjust your repayment from your next billing cycle after the new rate takes effect on 25 September. Most banks send an SMS or email confirming your new instalment. If you have a fixed-rate home loan, your repayment won’t change until your fixed period ends.
It’s worth checking your next bank statement to confirm the new amount, especially if your bond is paid by debit order.
What should existing homeowners do now?
You don’t need to panic, but it is a good time to review your budget. Here are five practical steps:
- Check your new instalment. Confirm the figure your bank sends you and update your debit order budget.
- Keep paying a little extra if you can. If you already pay more than the minimum, don’t stop. Extra payments reduce your capital and cushion you against further increases.
- Look at your access bond. If you’ve built up savings in your bond, avoid dipping into it for non-essentials, since that money is saving you interest at 10.75% or more.
- Review other debt. The rate hike could mean higher repayments for variable-rate home loans, car finance, personal loans and credit-card debt. Paying down expensive short-term debt first frees up room for your bond.
- Talk to your bank early if you’re under pressure. Banks are far more flexible when you contact them before you miss a payment, not after.
Should first-time buyers still apply for a home loan?
Yes, if your budget allows for it. A 0.25% increase changes your affordability slightly, but it doesn’t close the door on buying. What matters most is getting an accurate picture of what you qualify for at today’s rates.
Banks assess affordability on your net income and monthly expenses, so a higher rate can reduce the maximum loan you qualify for. That’s exactly why pre-qualification is so valuable: you’ll know your realistic price range before you start viewing homes. If you’re new to the process, our guide on what first-time home owners need to know walks you through the key steps.
There’s still flexibility for buyers without a large deposit. According to ooba Home Loans, the proportion of first-time buyer applications for cost-inclusive loans increased more than fivefold, from around 3% in 2021 to nearly 16% in early 2026.
Can a bond originator help me get a better rate?
Yes. This is where the rate you negotiate becomes just as important as the repo rate itself. Even a small improvement on your rate, such as securing prime minus 0.5% instead of prime, can save you more each month than today’s hike costs.
Bond Gallery submits your application to multiple major banks, including Standard Bank, Absa, FNB and Nedbank, so they compete for your business. Our service is free to you, as we’re paid by the bank that grants your loan.
Will interest rates go up again in 2026?
It’s possible, but not certain. Before today’s decision, Investec chief economist Annabel Bishop said financial markets were pricing in a second hike by the end of the year. At the same time, the economy is under pressure: it contracted by 0.2% in the second quarter, which may make the MPC more cautious.
The Reserve Bank has been clear that it will respond to the data. The practical takeaway is to budget with some breathing room, rather than planning around a best-case scenario.
Frequently asked questions
What is the repo rate in South Africa now?
The repo rate is 7.25% and the prime lending rate is 10.75%, effective 25 September 2026.
How much does a 0.25% rate increase add to my bond?
Roughly R168 per month for every R1 million owed on a 20-year bond at prime.
Does the rate hike affect fixed-rate home loans?
No. Fixed-rate repayments stay the same until the fixed period ends.
Is it still a good time to buy property?
It can be, if the repayments fit comfortably within your budget. Pre-qualifying first shows you what you can afford at current rates.
Can I lower my interest rate after the hike?
You may be able to negotiate a better rate when you apply, or when you switch banks. A bond originator compares offers from several banks on your behalf.
Get expert help with your home loan
Rate changes are easier to handle when you have someone in your corner. Whether you’re buying your first home, upgrading or wondering if you’re getting the best rate, Bond Gallery’s consultants can assess your affordability and apply to the major banks on your behalf, free of charge.
Find a consultant near you, or contact our team today.