23 September 2026
The South African Reserve Bank has increased the policy rate by 25 basis points, taking it from 7% to 7.25%. This means the prime lending rate is expected to move from 10.50% to 10.75%, adding a modest amount to the cost of borrowing for households with prime-linked loans.
While a rate increase is unlikely to be welcome news for anyone with a bond, the decision needs to be viewed in the context of the extraordinary inflationary pressures facing the economy – and, importantly, as an attempt to prevent those pressures from becoming more persistent.
According to Craig Mott, National Sales Manager for the Rawson Property Group, the increase is a reminder that the interest-rate cycle is not always a straight line.
“A 25 basis point increase will certainly be felt, particularly by households already managing tight budgets, but it doesn't change the fundamentals of the property market,” he says. “What matters is why the Bank has moved and what that means for the months ahead.”
The decision comes against a backdrop of renewed global inflationary pressure, largely linked to the ongoing geopolitical situation in the Middle East and its impact on energy prices.
South Africa is a net importer of fuel, which means higher international oil prices feed relatively quickly into local transport and household costs. The SARB has already highlighted fuel prices, rising inflation expectations and elevated services inflation as significant upside risks to the inflation outlook.
According to Leonard Kondowe, National Manager for Rawson Finance, the increase should therefore be understood as a preventative measure rather than simply a reaction to today's inflation number.
“The Reserve Bank is essentially trying to stop a temporary shock from becoming a permanent inflation problem,” he explains. “Fuel and global energy prices are outside South Africa's control, but the Bank can influence whether those price increases start feeding into broader inflation expectations and wage and service costs.”
For property buyers, the immediate concern will naturally be the increase in monthly bond repayments.
But Kondowe says it is important not to interpret a single 25 basis point move as a reversal of the broader property-market recovery.
“This is a relatively small adjustment, and it needs to be viewed against the much bigger picture,” he says. “The property market isn't suddenly becoming unaffordable because of a 25 basis point increase. Buyers may need to adjust their budgets, but the fundamentals of buying within your means, choosing the right property and taking a long-term view remain exactly the same.”
There is also a potentially positive side to the Bank's decision.
If tighter policy helps prevent the current inflation shock from becoming entrenched, it can help create the conditions for inflation to moderate again. And lower inflation is ultimately what creates room for lower interest rates over the longer term.
Advice for buyers and sellers:
For prospective buyers, the increase will mean slightly higher repayments, but it does not necessarily make buying a home the wrong decision.
Kondowe says affordability should be assessed.
“The best approach is still to make a decision based on what you can comfortably afford today,” he says. “Buyers should get prequalified before shopping for a property, giving them a realistic picture of their borrowing capacity and expected monthly repayments.”
“A 25 basis point increase may change the numbers slightly, but it shouldn't change the principle,” he says. “If the repayment is affordable, the property meets your needs and you've allowed some room in your budget, you can make a confident decision without trying to predict every move the Reserve Bank might make.”
For existing homeowners, the same principle applies: review your budget, understand the impact on your repayment and avoid making decisions based purely on short-term rate movements.
For sellers, a rate increase may initially sound like a threat to buyer demand, but Mott says the impact is likely to be more nuanced.
“Buyers don't disappear because of a 25 basis point increase,” he says. “They become more conscious of affordability, which makes realistic pricing even more important.”
A property that is correctly priced and positioned for its market can still attract serious buyers, particularly where there is genuine demand and limited suitable stock.
The rental market may see continued demand
The rental market could experience a different effect from the rate increase.
Higher borrowing costs can encourage some prospective buyers to remain renters for longer, particularly if they are not yet comfortable taking on a larger bond repayment. That can support rental demand, although affordability remains a consideration for tenants too.
Jacqui Savage, National Rentals Manager for the Rawson Property Group, says the rental market
remains closely linked to the affordability equation.
“When the cost of borrowing rises, some people naturally reassess whether buying is right for them right now,” she says. “That can keep people in the rental market for longer and support demand for well-located, appropriately priced rental properties.”
Savage cautions, however, that strong rental demand doesn't remove the need for careful property management and tenant screening.
“Affordability is important on both sides of the rental equation,” she says. “Landlords need to price realistically and screen thoroughly, while tenants need to make sure the rental they choose fits comfortably within their budget.”
Looking ahead
The next few months will depend heavily on how inflation, fuel prices, the rand and global geopolitical conditions evolve. The SARB has already made it clear that its decisions will remain data-dependent and that it will assess the balance between inflation and growth at each meeting.
For consumers, that means trying to predict the next interest-rate move is less useful than making sure today's financial decision is sustainable.
“A single 25 basis point move shouldn't determine whether someone buys, sells or rents,” says Kondowe. “The better question is whether the decision makes sense for your circumstances, your budget and your long-term plans.”
Whether you're buying, selling or renting, a good property professional or finance expert can help you understand what the current rate means for your circumstances – and how to plan for whatever comes next.
