On the 29th of May 2025 The South African Reserve Bank (SARB) voted to cut the country's intrest rates by 25 basis points. This cut reduces the prime lending rate to 10.75%, form 11%.
When the South African Reserve Bank lowers the prime lending rate, it sets off a ripple effect across the real estate sector. Most notably, reduced interest rates make home loans more affordable, easing the monthly repayment burden for buyers. This increased affordability often draws more people into the market, particularly first-time buyers and middle-income earners who previously may have been priced out.
As demand rises, especially in popular suburbs and fast growing urban neighbourhoods, property prices can begin to climb, creating momentum in the market. Lower lending rates also make property investment more appealing—buy-to-let opportunities become more attractive when borrowing costs are lower and rental yields remain stable. For developers, access to cheaper finance can spur new housing projects, particularly in high-growth areas.
However, the long-term impact often hinges on broader economic sentiment. If rate cuts are accompanied by economic uncertainty or low consumer confidence, their stimulatory effect might be muted. Still, for many, a drop in the prime lending rate signals an opportunity to enter or expand within the property market—making it a key factor to watch for anyone with real estate aspirations in South Africa.
Curious about how the new prime lending rate may affect your property purchase or investment? Use our bond calculator to get a clearer picture of your financial outlook!