R842 per month pain for homeowners in South Africa

The latest 25-basis-point repo rate hike to 7.25% has increased South African homeowners’ monthly bond repayments, with a R5 million bond costing an extra R842 per month.

On 23 September, the Reserve Bank increased the repo rate by 25 basis points to 7.25%, up from 7%. As a result, the prime lending rate rose from 10.5% to 10.75%.

Seeff Property Group chairman Samuel Seeff said this decision is another blow to consumers and the struggling economy.

“We had hoped that the Bank would look past short-term spikes and focus on protecting long-term economic stability,” he said.

“The current inflationary spike is driven by temporary factors such as oil prices rather than runaway domestic demand.”

Seeff explained that while the higher interest rate will do little to mitigate external cost shocks, it will inflict real financial pain on households and businesses.

National economic growth forecasts have already been downgraded from 1.4% to around 1.1%. Now, the higher risk of higher borrowing costs will further depress consumer confidence and spending.

“It unnecessarily punishes already overburdened consumers and will dampen economic and property market activity.” 

“This rate hike now also effectively wipes out most of the relief gains over the last year, pushing prime to its highest level since May 2025.”

Seeff pointed out that household budgets are already stretched following the May rate hike and other cost increases. 

Monthly bond repayments will now increase further. This could result in home loan defaults and heightening affordability challenges for first-time buyers.

“It will place an unnecessary squeeze on the property market, which is a key driver of economic growth and wealth creation,” he added. 

While the market has remained resilient, the interest rates have meant there has been no real growth over the last three years. 

National transaction volumes are still 16% below pre-pandemic levels, and affordability remains a major challenge.

However, Seeff noted that the property market has remained resilient despite the headwinds.  “The higher interest rates are temporary, and lending conditions remain fundamentally favourable.” 

“Well-positioned buyers who act now can still secure good value and establish a foothold in the market before inflation eases and property prices begin their next upward cycle.”

The table below shows the monthly increases the country’s homeowners will see in the coming months, according to Seeff.  

Bond	Previous monthly repayment	New monthly repayment	Extra cost
R750,000	R7,488	R7,614	R126
R900,000	R8,985	R9,137	R152
R1 million	R9,984	R10,152	R168
R1.5 million	R14,976	R15,228	R252
R2 million	R19,968	R20,305	R337
R2.5 million	R24,960	R25,381	R421
R3 million	R29,951	R30,457	R506
R5 million	R49,919	R50,761	R842

The property market remains resilient

Pam Golding Property group chief executive, Dr Andrew Golding, similarly acknowledged that while the increased rate will put pressure on homeowners, the market remains strong.

Banks continue to support housing activity through competitive lending and products that reduce upfront costs. 

According to ooba Home Loans, first-time buyer applications for cost-inclusive loans increased more than fivefold from around 3% in 2021 to nearly 16% in early 2026.

Approval rates have also risen, reaching 88.8% for cost-inclusive loans among first-time buyers, the group most sensitive to monthly repayments.

Some banks also offer loans covering upfront purchase costs. For example, Absa’s MyHome product can provide up to 110% to buyers, with the additional 10% available for transfer and bond registration costs.

Average weighted pricing is currently around 0.75% below prime, providing some relief despite higher rates. However, Golding said affordability and credit assessments remain key factors when applying for a home loan.

Looking ahead, he said that residential property demand remains supported by demographic, lifestyle, and economic factors, although market performance varies across regions and property nodes.

Markets with strong economic activity, reliable infrastructure, sound municipal management and lifestyle appeal are showing greater resilience as buyers become more selective.

There are also signs that properties are selling faster. FNB’s latest Property Barometer shows that the average time on the market fell to 10 weeks and one day in Q3 2026, the fastest pace recorded since 2022.

The latest rate increase comes as the residential market continues to adapt to changing economic conditions. 

Higher borrowing costs may temper activity, but continued first-time buyer demand, competitive lending conditions and faster selling times are supporting the market.

For the time being, Golding urged buyers and investors to implement careful financial planning before purchasing a property. 

Location, infrastructure, property quality and long-term demand are likely to play an increasing role in determining the performance of individual residential markets.