2025 Interest Rates Unpacked – What It Means For Your Deals

2025 was the year South Africa finally shifted from a long monetary policy “pause” into a carefully managed easing cycle. Throughout the year, the SARB had lowered the repo rate in measured 25-basis-point steps. After starting the year at 7.50%, it has been taken down to 7.00% by August. This week, the MPC added another 25bp cut, reducing the repo rate to 6.75% and the prime lending rate by a corresponding 25bp.

The logic behind the continued easing has remained consistent: inflation cooled into the lower half of the target band, global growth remained weak, import inflation eased, and major central banks adopted a softer stance. But the SARB remained cautious, cutting only in small increments because of persistent fiscal uncertainty, rand vulnerability and trade-related risks.

For property practitioners, these rate reductions provide a genuine affordability boost, but the message for clients should remain the same: lower rates help, but prudent planning still matters deeply for 2026 buyers.

Quick Recap: What happened to the repo rate in 2025

• January 2025: Repo rate cut 25bp to 7.50%, marking the third cut in the current easing sequence.
• 20 March 2025: The MPC paused, holding at 7.50%.
• 29 May 2025: Another 25bp cut brought the repo rate to 7.25%, with the SARB emphasising gradually easing inflation.
• 31 July 2025: A further 25bp reduction lowered the repo rate to 7.00%, with the government welcoming the consumer relief.
• 18 September 2025: The MPC paused, holding at 7.00%.
• 20 November 2025: The SARB cuts 25bp, bringing the repo rate to 6.75%, the lowest level since November 2022.

Why the SARB cut rates: local and global causes explained

Local drivers

• Inflation remained low and stable: Both headline and core inflation sat comfortably within the 3-6% target band for most of the year. The SARB cited a lower inflation starting point and subdued domestic pressures as key justification for easing.
• Weak domestic growth: With economic activity subdued and consumer demand soft, rate cuts were a logical response to support growth without compromising price stability.
• A more supportive rand and lower import costs: A firmer currency and lower oil and goods import costs helped reduce upside inflation risks.
• Ongoing political and fiscal risks kept cuts conservative. Uncertainty around fiscal consolidation, as well as external trade risks — including tariff shifts in global markets — meant the MPC avoided any cuts larger than 25bp.

Global drivers

• Global disinflation and easing bias: Major central banks signalled or implemented small rate cuts as global goods inflation cooled and growth softened, lowering the global interest rate floor for emerging markets.
• Weak global trade and geopolitical risk: Slowing trade volumes and elevated geopolitical tensions increased downside risks to global growth, prompting central banks (including the SARB) to consider modest, defensive easing.
  The bottom line is: Inflation was low enough and growth fragile enough for the SARB to cut, but upside risks to the rand, fiscal position and energy prices meant each move remained incremental.

Why November’s decision matters more than usual

The November rate decision carries structural significance beyond the 25bp cut. Throughout 2025, SARB leaders and several policy analysts highlighted a long-term desire to anchor inflation closer to the lower end of the 3-6% target band, with markets increasingly pricing in the possibility of:

• a more explicit 3% inflation anchor, or
• a recalibration of the formal target in the coming budget-policy cycle.

Such a shift could gradually lower South Africa’s neutral real and nominal interest rate — which has implications not just for this cycle, but for how rates behave in the next decade. November’s cut therefore signals short-term easing and strengthens expectations that South Africa may move toward a structurally lower inflation target over time.

What this means for the property market

Lower repo → lower prime → cheaper borrowing: The latest cut improves bond affordability, strengthens demand for home loans and makes refinancing more attractive for existing homeowners.

In 2025, home loan approvals and applications picked up noticeably after mid-year, with Q2–Q3 volumes climbing compared to the previous year. The additional November cut should reinforce that momentum into early 2026. But lower rates do not automatically reignite a boom. Real drivers still include income stability, employment, lending standards and housing supply.

How to guide clients and homebuyers heading into 2026

For first-time buyers

• Make the numbers simple: Repo at 6.75% → prime reduced again this month by 25bp. Explain how a 25bp move typically shifts a 20-year bond repayment per R1 million borrowed.
• Always stress-test affordability: Encourage pre-approvals and run scenarios that include possible modest rate increases later in the cycle.
• Consider partial fixed-rate options: For risk-averse buyers, fixed-rate components can add stability — provided break fees and conditions are clearly understood.
• Deposits still matter: Lower rates don’t replace the need for a meaningful deposit and funds for transfer and bond registration costs.

For investors and landlords

• Model cash flow sensitivity:  Lower rates help yields, but vacancy rates, maintenance costs and tax implications must be factored in.
• Keep rental assumptions conservative: Even with declining rates, rental escalations should be realistic and tied to income growth.

For all clients

• Avoid over leveraging: A lower rate environment is helpful but reserves and emergency funds remain essential.
• Watch the big risks: Rand shocks, energy price spikes or fiscal slippage could change the SARB’s path quickly. Clients should remain agile and avoid assuming uninterrupted cuts.

Final takeaway

2025 demonstrated that the SARB will ease when inflation allows, but always cautiously and in small increments when risks are mixed. For the property market, the November cut boosts affordability and strengthens buyer interest heading into 2026.

The opportunity is clear: improved affordability, better borrower sentiment and renewed demand. The responsibility is equally clear: promote conservative planning, transparent affordability assessments and long-term financial resilience. With this week’s cut, the wind is at buyers’ backs — but guidance from property professionals remains the key to ensuring they use that wind wisely.