South Africa’s housing market is poised for a much-needed recovery following the latest interest rate cut by the South African Reserve Bank. On Thursday, the central bank reduced the interest rate by 25 basis points, bringing the prime lending rate down to 11.25%.
This follows a 25-basis-point cut in September — the first-rate reduction in four years. With the latest move, interest rates have now dropped by a total of 50 basis points over the past two months. The rate cut was widely anticipated, with economists forecasting an additional 50-basis-point reduction in the first half of 2025.
The September rate cut sparked positive sentiment, with data from Standard Bank indicating an uptick in home loan applications and new home loan approvals.
“The increase in home loan activity is largely due to improved economic conditions and lower inflation, but affordability remains a challenge for many,” says Toni Anderson, Head of Standard Bank Home Services. “We’re hopeful that the further rate cuts expected next year will have a positive impact on household incomes.”
As interest rates continue to fall, homeownership will become more accessible due to lower monthly repayments. Not only does this benefit existing homeowners who are managing their repayments, but it also opens the door for more first-time buyers who have been waiting for the right time to enter the market.
“With improving affordability, we expect to see sustained growth in home loan applications and property purchases,” adds Anderson. “We’re excited to support more aspiring homeowners, especially first-time buyers. At Standard Bank, we’re now able to offer first-time buyers up to 108% of the loan amount.”