In a widely anticipated move, the South African Reserve Bank (SARB) has announced a 25-basis-point cut to the repo rate, bringing it down to 7.25%. This marks the second interest rate reduction in 2025, continuing the SARB’s gradual easing cycle that began in September last year, aimed at boosting affordability and stimulating economic recovery.

According to Leonard Kondowe, National Manager at Rawson Finance, this decision could not have come at a better time. “This rate cut is a breath of fresh air for consumers who’ve been managing tight budgets under high interest rates,” says Kondowe. “Even a small reduction can have a meaningful impact on monthly bond repayments, which is particularly helpful for first-time buyers entering the market.”

What the rate cut means for homeowners

Most South African home loans are linked to the prime lending rate, which has now dropped to 10.75%. This directly lowers monthly repayments for bondholders.

“It’s not a dramatic saving month-to-month, but it adds up quickly over time,” says Kondowe. “And for households already feeling stretched, even a small relief can create room to breathe – or better yet, room to save.”

He encourages homeowners not to absorb the difference into daily spending but rather to continue paying their bond at the previous higher rate if they can.

“Every extra rand paid into your bond now reduces the interest you’ll pay over the long term,” he explains. “That financial buffer could also prove valuable if rates rise again in future.”

Opportunity for first-time buyers

Lower interest rates also mean improved affordability – a game changer for first-time buyers who may have previously found property just out of reach.

“This announcement could expand the number of people who qualify for financing,” says Kondowe. “That creates a golden opportunity for new buyers to take the leap into homeownership – especially while prices in many markets remain competitive.”

Kondowe is quick to stress, however, that better affordability doesn’t mean buyers should max out their credit potential.

“Just because you qualify for more doesn’t mean you should stretch to the limit,” he warns. “Stay within your means, and don’t forget to factor in all the costs of owning a home – from maintenance to municipal rates.”

The importance of prequalification

With buyer activity expected to rise in response to the rate cut, Kondowe stresses the value of prequalification.

“Prequalification gives you a clear picture of your financial position and what you can realistically afford,” he says. “It also strengthens your offer when competing for a property – especially in a market where stock in the lower to mid brackets is moving fast.”

Rawson Finance offers a free prequalification service, giving buyers access to tailored advice and bond comparisons across all major lenders. “Getting prequalified is quick, simple, and one of the smartest moves you can make,” Kondowe adds. “It takes the guesswork out of your home search.”

What this means for the market

Historically, interest rate cuts help stimulate the property market, and 2025 appears to be following that trend. Improved affordability and a more optimistic economic outlook are expected to drive renewed interest in property purchases.

“This rate cut won’t create an overnight boom, but it’s an important psychological shift,” says Kondowe. “Confidence is coming back. People are beginning to plan again, and property is once more part of that conversation.”

Make the most of the momentum

For those considering a move – whether it's buying a first home, upgrading, or investing – now is a good time to explore your options.

“Even if you’re not quite ready to purchase, it’s worth understanding what’s possible,” says Kondowe. “With rates now heading in a more favourable direction, early planning and preparation can put you in the perfect position to act when the time is right.”