Reserve Bank cuts repo rate to 6.75%: What it means for homeowners

The South African Reserve Bank's Monetary Policy Committee has lowered the repo rate by 25 basis points, to 6.75%, with effect from today.

This adjustment lowers the prime lending rate to 10.25% – the lowest it has been in over two years.

In its statement, the committee said the decision was unanimous."Members agreed there was scope now to make the policy stance less restrictive, in the context of an improved inflation outlook."

Expanding on the inflation outlook, the MPC noted that inflation has risen over the past few months, reaching 3.6% for October.

"This is higher than the 3% average for the first half of the year. The uptick is mainly due to non-core items: meat, vegetables, and fuel. We continue to see this pressure as temporary, with inflation heading lower again from the beginning of next year."

Commenting on the interest rate cut, Bradd Bendall, BetterBond’s National Head of Sales, said another cut in the prime lending rate will bring a welcome reprieve to homeowners who will now have to pay less on their monthly bond repayments.

He noted that today’s decision means the repo rate has dropped a cumulative 150 basis points since November 2022.

Craig Mott, National Sales Manager for the Rawson Property Group, says the move builds on an already noticeable upward shift in market confidence. “We’ve seen a steady increase in buyer engagement throughout the year, and this latest rate cut is likely to accelerate that momentum,” he said.

He concluded, “It’s arriving at a time when buyers are re-entering the market with purpose, and this just gives them more reason to act.”

THE MERCURY