Understanding the Repo Rate in South Africa
Simple guide for South African residents
Last updated: October 2025
Quick Facts
- Current repo rate: 7.00% (as of August 2025)
- Prime lending rate: 10.50%
- The repo rate has dropped 1.25% since September 2024
- Next MPC meeting: November 2025
Table of Contents
What is the Repo Rate?
The repo rate (short for repurchase rate) is the interest rate the South African Reserve Bank (SARB) charges when it lends money to commercial banks like Standard Bank, FNB, ABSA, and Nedbank.
Think of it as the “price of money” for banks. When this price goes up or down, it affects what you pay for loans and earn on savings.
Simple explanation:
- SARB lends to banks at the repo rate
- Banks lend to you at the prime rate (repo rate + 3.5%)
- When repo rate changes, your loan costs change too
✅ Current Repo Rate (October 2025)
As of August 1, 2025:
Repo Rate: 7.00%
Prime Rate: 10.50%
Good news! The repo rate has been cut 5 times in a row since September 2024. This is the lowest rate since November 2022.
Recent Rate Changes:
| Date | Repo Rate | Prime Rate |
|---|---|---|
| July 2025 | 7.00% | 10.50% |
| May 2025 | 7.25% | 10.75% |
| January 2025 | 7.50% | 11.00% |
| November 2024 | 7.75% | 11.25% |
| September 2024 | 8.00% | 11.50% |
How the Repo Rate Works
The South African Reserve Bank uses the repo rate to control inflation and keep the economy stable. Here’s how it works:
Step-by-Step Process:
Step 1: SARB Sets the Rate
The Monetary Policy Committee (MPC) meets every two months to decide the repo rate.
Step 2: Banks Borrow from SARB
Commercial banks borrow money from SARB at the repo rate when they need cash.
Step 3: Banks Set Prime Rate
Banks add 3.5% to the repo rate to get the prime lending rate. This covers their costs and profit.
Step 4: You Pay Based on Prime
Your home loan, car loan, and personal loan rates are based on the prime rate.
Why SARB Changes the Rate:
When inflation is too high:
- SARB increases the repo rate
- Borrowing becomes more expensive
- People spend less money
- Prices stop rising so fast
When inflation is low and economy needs boost:
- SARB decreases the repo rate
- Borrowing becomes cheaper
- People can spend more
- Economy grows faster
⚠️ How the Repo Rate Affects Your Money
The repo rate touches almost every part of your financial life. Here’s what changes when the rate goes up or down:
| What Changes | When Rate Goes Down | When Rate Goes Up |
|---|---|---|
| Home Loans | Monthly payment decreases ✓ | Monthly payment increases ✗ |
| Car Loans | Monthly payment decreases ✓ | Monthly payment increases ✗ |
| Credit Cards | Interest rate decreases ✓ | Interest rate increases ✗ |
| Personal Loans | Cheaper to borrow ✓ | More expensive to borrow ✗ |
| Savings Accounts | Earn less interest ✗ | Earn more interest ✓ |
| Cost of Living | More money available to spend ✓ | Less money available to spend ✗ |
Important: These changes only affect variable-rate loans. If you have a fixed-rate loan, your payments stay the same until the fixed period ends.
Impact on Your Loans
Let’s see exactly how the recent rate cuts have helped people with loans:
Real Examples of Savings (September 2024 vs October 2025):
| Loan Type | Loan Amount | Old Payment (11.50%) | New Payment (10.50%) | Monthly Saving |
|---|---|---|---|---|
| Home Loan (20 years) | R1,000,000 | R10,946 | R9,905 | R1,041 |
| Home Loan (20 years) | R500,000 | R5,473 | R4,953 | R520 |
| Car Loan (5 years) | R300,000 | R6,595 | R6,442 | R153 |
| Personal Loan (3 years) | R50,000 | R1,664 | R1,625 | R39 |
💰 Total Impact: These savings add up! Over a year, someone with a R1 million home loan saves R12,492 thanks to the recent rate cuts.
📊 Impact on Your Savings and Investments
When the repo rate goes down, interest rates on savings also decrease. Here’s what this means:
Example: Savings Account Impact
If you have R100,000 in a savings account:
- At 5% interest (2024): You earn R416 per month
- At 4% interest (2025): You earn R333 per month
- Difference: R83 less per month
The Trade-Off:
While you earn less on savings, remember:
- If you have debt, you’re saving much more on loan payments
- Lower rates mean more money available to save each month
- The economy grows, which can create more job opportunities
What You Should Do When Rates Change
When Rates Are Going Down (Like Now in 2025):
1. Keep Your Loan Payments the Same
Don’t reduce your monthly payment just because rates dropped. Keep paying the old amount to finish your loan faster!
2. Pay Off Expensive Debt First
Use the extra money from lower payments to pay off store cards and personal loans (they have higher interest rates).
3. Build an Emergency Fund
Save the money you’re saving from lower loan payments. Aim for 3 months of expenses in case of emergencies.
4. Consider Refinancing
If you have old debts at high rates, ask your bank about refinancing to get a better rate.
When Rates Are Going Up:
1. Review Your Budget
Higher loan payments mean less money for other things. Adjust your spending plan immediately.
2. Avoid New Debt
Don’t take out new loans when rates are high. Wait for rates to come down if possible.
3. Consider Fixed Rates
Ask your bank about fixing your interest rate to protect against further increases.
🔮 What’s Next? Future Outlook for 2025-2026
Based on current economic conditions and expert predictions, here’s what to expect:
Next MPC Meeting:
- Date: November 2025
- Expectation: Most analysts think the rate will stay at 7.00%
- Possible: Small chance of one more 0.25% cut
Key Factors to Watch:
| Inflation Rate | Currently 3.0% – SARB wants to keep it at this level |
| New Inflation Target | SARB now targeting 3% instead of 4.5% |
| Economic Growth | South Africa’s economy growing slowly at around 1-2% |
| Global Uncertainty | US trade policies and tariffs affecting predictions |
Expert Predictions:
- Rest of 2025: Repo rate likely to stay at 7.00%
- 2026: Possible for rates to drop further to around 6.5%-6.75%
- Prime rate could reach: Below 10% by end of 2026
⚠️ Remember: These are predictions, not guarantees. The SARB looks at many factors including inflation, economic growth, and global events. Always plan your budget for your current rate, and treat any future cuts as a bonus!
Understanding Variable vs Fixed Interest Rates
| Type | How It Works | Best For |
|---|---|---|
| Variable Rate |
• Changes with prime rate • Goes up and down with repo rate • Most common type in SA |
• When rates are falling (like now!) • If you want flexibility • Most South Africans |
| Fixed Rate |
• Stays the same for agreed period • Usually 1-5 years • Doesn’t change with repo rate |
• When rates are going up • If you need predictable payments • For strict budget planning |
❓ Common Questions About the Repo Rate
Q: When will the SARB announce the next rate decision?
A: The MPC meets every two months in January, March, May, July, September, and November. The next meeting is in November 2025. Announcements are made on Thursdays at 3:00 PM.
Q: Does my loan payment change immediately?
A: Usually, yes. Most banks apply the new rate from the first day of the next month after the announcement. Check with your specific bank for their policy.
Q: What if I have a fixed-rate loan?
A: Fixed-rate loans don’t change when the repo rate changes. Your rate stays the same until your fixed period ends, then it switches to the variable rate at that time.
Q: How do I know what my new monthly payment will be?
A: Your bank will send you a notification showing your new payment amount. You can also call them or check your online banking after a rate change announcement.
Q: Why is the prime rate always 3.5% higher than the repo rate?
A: This is a standard margin that covers the bank’s costs and profit. It’s the same for all major South African banks and has been 3.5% for many years.
Q: Can the repo rate ever go to zero like in other countries?
A: It’s very unlikely in South Africa. Our repo rate has always been above 3.5% since records began. Our inflation challenges and economic structure are different from countries with near-zero rates.
📞 Important Contacts
| South African Reserve Bank | www.resbank.co.za |
| Banking Ombudsman | 0860 800 900 |
| National Credit Regulator | 0860 627 627 |
| DebtBusters (Debt Help) | 0869 99 0606 |
Our Final Recommendations
Right now (October 2025), the repo rate environment is very favourable for borrowers. We’ve seen five consecutive rate cuts bringing the rate to 7.00% – the lowest since November 2022.
Take action today:
- Keep paying your old loan amount to finish debt faster
- Use the savings to pay off expensive credit cards and store accounts
- Build an emergency fund with 3 months of expenses
- Choose variable-rate loans to benefit from any future cuts
- Don’t take on new debt just because rates are lower – borrow responsibly
The next MPC meeting is in November 2025. While rates may stay the same or drop slightly, always plan your budget based on current rates. Any future cuts should be seen as a bonus, not something to rely on.
Disclaimer: This information is provided for educational purposes and was last updated in October 2025. Financial regulations, fees, and requirements may change. The repo rate is determined by the South African Reserve Bank’s Monetary Policy Committee and is subject to change based on economic conditions. Always verify current information with official sources before making financial decisions.
For complaints or disputes, contact the Financial Sector Conduct Authority (FSCA) at 0800 110 443 or visit www.fsca.co.za. For repo rate updates, visit the South African Reserve Bank at www.resbank.co.za