The decision comes as inflationary pressures have intensified, with consumer inflation rising to 4.4% in August from 4.3% in July, said SARB Governor Lesetja Kganyago. Higher oil prices and renewed geopolitical tensions have added to concerns about imported inflation and the potential for higher fuel and transport costs to filter through to household expenses.
The increase will add to borrowing costs for households already dealing with elevated living expenses, although some property industry commentators point to continued competition among lenders, resilient buyer demand, and the possibility of lower rates in the future as factors that could cushion the impact.
The real estate industry reactions in summary
Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond
The latest increase will put renewed pressure on monthly bond repayments, but easing inflation could pave the way for a rate cut in the future. Inflation fell from 5,0% in June to 4.3% in July – only marginally above the upper end of the inflation target range. The rand has also remained resilient in recent months, helping to contain the cost of imported goods.
The latest move should be viewed partly as a precaution against further oil-price shocks amid ongoing hostilities in the Middle East. While prime has risen to 10.75%, it remains below the 11.75% level seen in 2023, meaning homeowners are still paying less than they were three years ago.
Neil Abernethy, Tyson Properties
The latest rate increase reinforces the need for prospective buyers to build a financial buffer rather than simply borrowing up to the maximum amount they qualify for. Higher fuel prices are likely to feed into transport and food costs, placing additional pressure on household disposable income and making affordability about more than the monthly bond repayment.
Those wishing to purchase a property – or even considering downsizing from a larger home to contain costs – should stay in the market but do their maths and work out exactly how much they can afford as a monthly payment on a home loan. Then, adjust this downwards in order to accommodate potential interest rate hikes upfront.
John Loos, independent economist
The hike is not too much of a surprise, but I had expected the MPC to wait until November. I do see that the CPI inflation rose to 4,4%, which is notably above the 3% target, yet oil prices are still stubbornly high, near $100 a barrel, with not much end in sight of the Iran conflict. So whether it was now or November, the SARB had to do something to curb the second-round effects of the fuel price inflation impacts and inflation expectations.
Adrian Goslett, CEO and Regional Director of REMAX Southern Africa
While many South Africans may be disappointed by the decision, it is understandable given the continued uncertainty in the global economic environment. The Reserve Bank had a tough decision as they weighed out local inflationary pressures against an uncertain international economic environment. While inflation fell to 4.3% from 5%, it is still well above the 3% target, meaning the SARB still needs to tread carefully when considering any changes in the months to come.
While an interest rate increase is never welcome news for homeowners or prospective buyers, existing consumers should review their monthly expenses, plan accordingly, and ensure that they understand what they can comfortably afford.
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty
The rate increase is likely to change the composition of property demand. It will reduce how much some buyers can afford and, in turn, the number of buyers competing for homes. However, this hike is not going to stop a serious property market. The rate is not the market. What buyers do with it is the market. Buyers who were already close to their affordability ceiling may respond by moving to smaller homes, different locations, or lower price brackets, while others may negotiate harder or delay their purchase.
At the luxury end, the issue is less about affordability and more about how buyers choose to deploy capital, particularly where a rate increase changes the relative attractiveness of property as an investment. For sellers and buyers alike, realistic pricing and an honest assessment of affordability will become increasingly important.
Samuel Seeff, chairman of the Seeff Property Group
We had hoped that the Bank would look past short-term spikes and focus on protecting long-term economic stability. The current inflationary spike is driven by temporary factors such as oil prices rather than runaway domestic demand. The higher interest rate will do little to mitigate external cost shocks but will inflict real financial pain on households and businesses. With national economic growth forecasts already downgraded from 1.4% to around 1.1%, the higher borrowing costs risk further depressing consumer confidence and spending.
It unnecessarily punishes already overburdened consumers and will dampen economic and property market activity. This rate hike now also effectively wipes out most of the relief gains over the last year, pushing the prime to its highest level since May 2025. Household budgets are already stretched, and monthly bond repayments will now increase further, risking home loan defaults and heightening the affordability challenges experienced by first-time buyers.
Dr Andrew Golding, Chief Executive of the Pam Golding Property Group
The increase reflects the growing inflationary risks facing the South African economy, particularly higher oil prices and the ongoing uncertainty arising from the conflict in the Middle East. The SARB has signalled that it remains focused on preventing temporary price pressures from becoming more entrenched.
The higher rate will inevitably place some additional pressure on prospective homeowners, particularly first-time buyers who remain more sensitive to monthly repayments. However, banks are continuing to support housing-market activity through competitive lending and products designed to reduce the upfront financial barriers to homeownership.
Rhys Dyer, CEO of the ooba Group
The latest increase comes against a backdrop of relatively subdued domestic growth but continued competition among lenders, which should help cushion some of the impact on the housing market.
Average home loan pricing was around 0.75% below prime in August, compared with 0.64% below prime from January to July, while lenders continue to show an appetite for home loan business through competitive rates, higher approval rates, and lower deposit requirements. With only one interest rate announcement remaining this year, the trajectory of inflation and global developments will be critical to the outlook for borrowing costs and housing demand.
Lytania Johnson, CEO of FNB
The increase underscores the Reserve Bank’s focus on maintaining price stability at a time when inflation risks remain elevated, although it comes against a backdrop of weaker domestic economic conditions and heightened global uncertainty.
Economic growth remains subdued, unemployment remains elevated and consumers continue to feel the impact of higher living costs. 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.
