R4,600 per month hit for South African homeowners 

South African homeowners are under tremendous pressure, with the repayments on a R1.5 million house rising around R4,600 since the Reserve Bank began hiking interest rates at the end of 2021. 

The Reserve Bank has hiked interest rates by 475 basis points since November 2021, taking the repo rate to 8.25% and the prime lending rate to 11.75%. 

This was in response to a surge in inflation, as South Africa emerged from its pandemic-era lockdowns and global supply chain disruptions pushed prices higher. 

Inflation has remained sticky, forcing the Reserve Bank to keep rates at 15-year highs for just over a year. 

Trade Intelligence’s Grocery Shopper Report for 2024/25 showed that food inflation averaged 10.8% last year after rising 9.2% in 2022. 

This has been compounded by electricity tariff hikes, which have pushed the price of electricity up 12.7% compared to last year. 

Petrol prices have also risen sharply – by 17.1% in 2022 and 5.1% in 2023. As a universal input, increases in the fuel price raise the cost base of almost the entire economy. 

Thus, the Reserve Bank has had to keep rates higher for longer, significantly increasing the cost of raising new debt and paying off existing loans. 

In its report, Trade Intelligence detailed the pressure homeowners face due to high interest rates. 

The firm noted that South Africans owe over R1.2 trillion on home loans – more than half the total debt owed. 

Repayments on a R1.5 million home have increased by over R4,600 per month compared to three years ago when the prime lending rate was only 7%.  This increase is shown in the table below. 

Home Loan Monthly Repayment Loan Value: R1,500,000 (term: 20 years)
Interest rate: 11.75%R16,255
Interest rate: 10%R14.475
Interest rate: 7% R11,629

South African consumers have come under significant financial pressure due to the rising cost of living detailed above. 

Trade Intelligence pointed out that South Africans are taking on more debt to maintain their lifestyles, with debt increasing 4% year-on-year despite higher interest rates. 

Worryingly, 9.9 million credit-active South Africans have missed more than three monthly payments or have adverse judgements against them. This is over a third of all credit-active consumers in South Africa. 

However, some economists think relief is on the way, with inflation trending downwards and a slight recovery in consumer spending. 

Stats SA revealed last month that retail sales increased for the third month in a row and are likely to rise again thanks to reduced load-shedding. 

This indicates that South African consumers are proving resilient, and relief from lower load-shedding, in particular, is filtering through to them. 

This improvement will also be boosted by consecutive petrol price cuts of above R1 per litre in June and July. 

The head of macroeconomic research at Standard Bank, Dr Elna Moolman, cautioned against being too optimistic. She said that more significant relief may take time to appear. 

Moolman also said that it is unlikely the Reserve Bank will significantly cut interest rates before the end of the year, with her research indicating a shallow cutting cycle of four 25 basis point cuts. 

Trade Intelligence echoed this warning, saying that relief from declining inflation and interest rates would take time to be felt. 

Furthermore, it said that reduced inflation does not mean prices are coming down – they will just increase at a slower rate. 

If South Africa’s new Government of National Unity can assure investors and be market-friendly, Moolman said interest rate cuts may come sooner and be sharper. 

Any positive political development should see investors pump money into South African assets, increasing the strength of the rand and thus making imports relatively cheaper. 

This should drive down inflation, particularly fuel inflation, and put more pressure on the Reserve Bank to cut rates. 


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