Repo rate rises to 10.75%: what the hike costs car and home loan payers
The Reserve Bank lifted the repo rate by 25 basis points, and IOL has calculated the monthly pain for borrowers. We report what it means and where the gaps are.
South Africans with car finance and home loans will pay more from October after the Reserve Bank’s Monetary Policy Committee raised the repo rate by 25 basis points, taking the prime lending rate to 10.75%.
As IOL reported on 23 September, the increase adds real money to monthly instalments. On a R250,000 vehicle loan over six years at prime with no deposit, the payment rises by about R32 a month. On a R500,000 car loan the increase is around R64 a month, and on a R1 million vehicle it is about R127. Over the full six years, the extra interest bill comes to roughly R2,292 on the R250,000 loan and R4,583 on the R500,000 loan.
For home loans the monthly hit is larger. An R800,000 bond at prime over 20 years costs about R135 more a month. A R1.5 million loan, close to South Africa’s average home price, goes up by around R253, and a R3 million loan by about R505. Over the life of the loan, the additional interest is in the region of R32,350 on the R800,000 bond, R60,657 on the R1.5 million loan and R101,094 on the R2.5 million example.
The Reserve Bank Governor, Lesetja Kganyago, said headline inflation was projected to reach 5% before slowing to 3% at the end of 2027, with fuel prices rising. Earlier on the same day, Statistics South Africa reported that the inflation rate had edged up to 4.4% in August from 4.3% in July. Consumer prices were largely unchanged during the month, but fuel price increases in September and October are expected to feed into the inflation outlook.
FNB chief economist Mamello Matikinca-Ngwenya said the decision to raise the repo rate by 25 basis points reflected the need to reinforce policy credibility at a time when external inflation risks have intensified and inflation expectations remain above the SARB’s 3% objective.
The reaction from the property sector was blunt. Samuel Seeff, chairman of the Seeff Property Group, said the hike would do little to mitigate external cost shocks but would inflict real financial pain on households and businesses. He said the current inflationary spike is driven by temporary factors such as oil prices rather than runaway domestic demand, and that the move would unnecessarily punish already overburdened consumers and dampen economic and property market activity.
“Household budgets are already stretched following the May rate hike and other cost increases,” Seeff said. “Monthly bond repayments will now increase further, risking home loan defaults and heightening the affordability challenges experienced by first-time buyers.”
FNB chief executive Lytania Johnson said the decision did not necessarily signal the start of a prolonged tightening cycle. “Economic growth remains subdued, unemployment remains elevated and consumers continue to feel the impact of higher living costs,” she said. “While today’s decision may be challenging for many households and businesses, managing inflation risks remains critical for protecting purchasing power and supporting long-term economic confidence.”
For first-time buyers, the picture is not only about the rate. Dr Andrew Golding, chief executive of the Pam Golding Property Group, said banks are continuing to support housing-market activity through competitive lending and products designed to reduce upfront financial barriers. He cited ooba Home Loans data showing that the proportion of first-time buyer applications for cost-inclusive loans rose more than fivefold, from around 3% in 2021 to nearly 16% in early 2026, with approval rates for those loans reaching 88.8% among first-time buyers over the period.
What the IOL piece does not do is put the rate in its recent context. South Africa’s prime rate was 11.75% in 2023 before the Reserve Bank began cutting. This is the second hike this year, following the May increase, and it takes prime back above the level it held through much of 2024. For a household already carrying the May increase, the combined effect on a R1.5 million bond is roughly R500 a month more than at the start of the year, before any other cost increases.
That is the number that matters for an ordinary reader: not the 25 basis points, but the rand amount leaving the account on the first of the month. The IOL calculations are a useful guide, and the outlet states clearly that actual repayments will vary by loan amount, term, rate and individual lender terms. Borrowers on fixed rates will not see an immediate change. Those on prime-linked variable rates will.
Source: IOL, Here’s how the interest rate hike will affect your car and home loan repayments
