For homeowners with a 20-year bond of R1m, the 0,25% increase translates into an approximate monthly repayment increase of around R165 to R175, while a R2m bond could see repayments rise by roughly R330 to R350 per month.
According to Stephen Whitcombe, MD of the FIRZT Property Group with the Reserve Bank's decision to increase the repo rate, it will clearly place additional pressure on household budgets – but should not cause prospective buyers to abandon their home ownership plans.
Whitcombe says that the increase underlines the need for home buyers to approach the market strategically, particularly if economists are correct in saying that rates may not start declining again until next year.
“The reality is that if rates continue to edge upwards, or even if they stay the same now, it becomes even more important than before to secure the most competitive home loan, and for prospective buyers to engage with a reputable mortgage originator before signing an offer to purchase.
“A good originator will negotiate aggressively with multiple banks on a buyer’s behalf and can often secure a more favourable lending rate than a buyer may obtain independently. And even a modest rate concession can result in meaningful savings over the life of a home loan.”
He says the latest increase also provides an opportunity for existing homeowners to reassess their financing arrangements. “If you have been servicing your home loan consistently for several years and have built up a strong payment history, now may be a good time to speak to your bank about renegotiating your interest rate. They may well be willing to offer improved terms to retain a good client.”
Meanwhile, says Whitcombe, it is important to keep the interest rate increase in perspective. “Any increase in borrowing costs is understandably concerning for consumers, especially at a time when many households are still under financial pressure. But the prime lending rate remains significantly below the high of 11,75% seen in 2024, and many consumers have thankfully been able to reduce their debts due to the interest rate decreases through 2025.
“Consequently, we believe that aspiring homeowners should resist the inclination to abandon their property goals now, particularly if they are younger buyers entering the market for the first time.
“Johannesburg especially offers some of the best relative property value in South Africa at the moment, and for young professionals and first-time buyers especially, there are still opportunities to secure good-quality homes in well-located suburbs at price points that would be difficult to find in many other major metros.”
He notes that Johannesburg’s combination of comparatively accessible pricing, lifestyle offerings, and strong transport links means buyers who take a long-term view can still enter the market sensibly, despite modest interest rate increases.
“And property remains one of the most effective long-term wealth creation tools available to ordinary South Africans. Waiting indefinitely for the ‘perfect’ interest rate environment can mean missing really good opportunities, particularly in markets where value is still strong.”
So rather than seeing the latest increase as a reason to retreat, Whitcombe says, consumers should focus on preparation, affordability planning and seeking professional advice. “It is worth remembering that interest rate cycles come and go, but property ownership requires a long-term view. And for well-prepared buyers, Johannesburg’s value-driven market currently presents some very meaningful prospects.”
Get help to defend your property goals
Herschel Jawitz, CEO Jawitz Properties says the increase in rates will come as an unwelcome surprise to consumers especially given what expectations were at the beginning of 2026. With inflation holding at the new Reserve Bank target of three percent, the expectation was at least two rate cuts this year of 0.25% each which would have taken the prime lending rate to 10.5%. Now consumers are faced with high fuel costs and higher interest rates within the space of three months.
Despite the ‘cost shock’, the impact on the residential market is expected to be marginal. Sentiment in the residential property market among buyers, sellers and investors remains firm and property price growth according to the latest stats from FNB is at 5.7% which is the highest year-on-year growth rate since 2021 when interest rates were at record lows post-Covid.
Demand for property across the country exceeds supply and even with the rate increase, the market is expected to hold at current levels. Much will depend on how long the current high fuel prices and increased rates will last. The longer they last, the greater the impact on the residential market.
Seeff slams premature rate hike, priority must be growth over temporary volatility
The Reserve Bank's decision to increase the repo rate is premature and a blow to the economy and property market, according to Samuel Seeff, chairman of the Seeff Property Group.
The hike will unnecessarily penalise consumers and hamper economic recovery for what is clearly a temporary spike in inflation, driven by external factors rather than domestic overspending, he says.
At 4%, the inflation rate is only just at the upper end of the Bank’s 3-4% target range while the Rand has remained stable below R17.00 to the USD. This, says Seeff, provided sufficient room to keep the rate unchanged for the sake of economic stability and growth. The temporary nature of the inflation blip should also have been considered. It was entirely expected and less severe than anticipated. Fuel prices and inflation will come down again. Given the missed opportunity to cut the rate in January, the rate should have been kept unchanged.
Consumers and the economy are already struggling under the weight of high interest rates and the burden of fuel price hikes and other cost increases. Further pressure on disposable incomes only exacerbates the current economic challenges while impeding recovery.
Seeff reiterates that economic stability and growth must be prioritised and facilitated wherever possible. The first-quarter job losses (taking unemployment to a disastrous 32.7%) and fading economic optimism which has already seen the GDP growth outlook downgraded to around 1.2% from an initial 1.6%, must be a priority at this stage.
The property market also seems to have lost momentum from the end of last year, largely due to the expected January rate hike not materialising. Overall, he says, despite the rate cuts over the last two years, the market remains around 20% below the 2021/2 highs. Higher interest rates and weakened disposable income affect buyers' ability to enter the market, especially first-time buyers where we continue seeing the average age increasing rather than reducing, he says further.
Buyers and investors want a stable environment with predictable interest rates, not a situation where rates are hiked unnecessarily and do not come down when they should.
That said, Seeff says the market continues to offer good opportunities for buyers and sellers. Despite the hike, the interest rate is still well below what it was two years ago, and the general mortgage lending environment remains hugely supportive of the market.
Buy smaller, buy smarter, but don’t wait
Berry Everitt, CEO of the Chas Everitt International property group, says the increase is a timely reminder for prospective homebuyers and property investors to focus on affordability and financial resilience while proceeding with their plans.
Everitt says the increase reinforces the need for real estate buyers, and particularly younger first-time purchasers, to buy well within their means and leave sufficient room in their budgets for rising living costs.
“The fact is that they are not only facing slightly higher borrowing costs, but also contending with rising fuel and food prices, the municipal rates and utility tariff increases to be implemented in July and broader inflationary pressures that are affecting almost every other area of household expenditure.
“Against that backdrop, The Reserve Bank had little choice but to increase rates today, and to make it clear that further increases are to be expected until it can bring inflation back in line with its 3% target. And what this means for housing consumers is that they must resist the temptation to borrow at the absolute maximum banks are willing to lend.”
The bank may approve you for a certain amount, he notes, but that doesn’t mean you should spend that whole amount on your property purchase. “The smartest buyers in this market are stress-testing their finances and asking themselves: could we still comfortably afford this home if/ when rates rise again, fuel and food becomes even more expensive and municipal bills increase?”
However, Everitt cautions against postponing homeownership indefinitely in the hope that interest rates will decline next year. “Many people think they should simply wait for rates to come down before buying, but that could be a costly mistake. We are already seeing stock shortages beginning to emerge in several areas of the market, and that is placing upward pressure on prices.
“This means that by the time interest rates eventually begin easing again – which experts now say will not be until late 2027 at best - prospective buyers could find themselves facing higher property prices that require a larger home loan than they would need today – and having to pay a bigger monthly instalment.
“That is why, is most cases, it makes more sense to buy something affordable now and start building equity in your own property rather than continuing to rent while waiting for ideal conditions.”
Focus now on finding a sensible entry poin
He says prospective buyers should focus now on finding a sensible entry point into the market and ensuring that monthly repayments leave enough flexibility to absorb future cost increases.
“Buying your first property has always been about taking the first step, not necessarily buying your forever home immediately. Property ownership is a journey, and building equity over time remains one of the most reliable ways to create long-term wealth.”
What is more, he says, further interest rate increases later this year could unintentionally intensify competition in the affordable and middle market. “If rates rise again as expected, we may well see more owners of larger, more expensive homes deciding to downscale in order to reduce monthly costs. That would further tighten supply in the middle market and could place even more upward pressure on prices in that sector.
“So our overall advice is not to hold back, but to buy smart, buy conservatively and make sure your home still works for your budget even if economic conditions become more difficult over the next 12 months.”
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