How the repo rate decision affected home loan applications in October

The South African Reserve Bank's (SARB) recent decision to maintain the repo rate at its September Monetary Policy Committee meeting has raised concerns within the housing market, with stakeholders noting an evident stagnation in home loan applications for October.

Home loan applications not impressive 

According to the November 2025 BetterBond Property Brief, although the latest BetterBond index of home loan applications managed to increase by 3.2% in October compared to the average for the third quarter, the year-on-year increase (October 2024) was muted at only 0.4%.

“Little doubt exists that many prospective homebuyers are sitting on the sidelines, hoping that interest rates will decline further.”

During October, the BetterBond index of home loan applications is said to have increased to its highest level since the third quarter of 2022.

The index remains 18.6% lower than its peak during the first quarter of 2021, but has recovered by 30% since bottoming out in the last quarter of 2023.  

Over the past two years, BetterBond says significant improvement has occurred in the number of home loans granted to first-time buyers (FTBs).

The bond originator says that between the 12 months to October 2023 and 2024, the residential property market took a hefty knock, induced by the highest interest rates in 15 years, which put the prospect of buying a home out of reach for many people, especially those in the lower income groups.

Fortunately, it is said to have changed over the past 12 months, with the YOY increase in total home loans granted to FTBs rising by 17.4%, an impressive improvement on the increase of merely 3.3% between 2023 and 2024.

Johannesburg’s South-Eastern suburbs have retained their number one position for the number of home loans granted to FTBs, with the Western Cape and Johannesburg’s North-Western suburbs neck-on-neck for position number two.

Residential property market performance

According to the property brief, South Africa’s residential property market recovered swiftly after the worst of the Covid-19 pandemic but was then faced with the unexpected scenario of ten successive increases in the prime rate (via the Reserve Bank’s official repo rate), totalling 475 basis points.

“In the process, the prime rate increased from 7% in October 2021 to a 15-year high of 11.75% in May 2023, where it remained until September 2024, despite an absence of demand inflation and a plunge in GDP growth to barely above zero.

Fortunately, a rate-cutting cycle commenced in September 2024, but the current prime rate of 10.5% remains 50% higher than four years ago.”

The authors of the index say further interest rate declines will be necessary to return the residential property market to the level of activity before 2023. 

Buoyed by commodity windfalls and stronger-than-expected tax revenue collection - coupled with tighter spending controls and improved investor sentiment - today’s MTBPS (Medium Term Budget Policy Statement), delivered by the Minister of Finance, struck an overall positive tone.

However, the February 2026 budget will serve as the true litmus test of South Africa’s fiscal resolve.

Reacting to the Medium Term Budget Policy Statement(MTBPS) delivered by the Minister of Finance Enoch Godongwana on Wednesday, the Pam Golding Property group said it was encouraging that with revenue expected to outperform by an estimated R19.3 billion, South Africa may be able to avoid the previously signalled R20 billion tax increase in February next year.

This would certainly be very welcome news for household finances and, by extension, the housing market-enhancing affordability, particularly for first-time home buyers, said Dr Andrew Golding, chief executive of the Pam Golding Property group.

Hope for further interest rate cuts

He added that the announcement of a new inflation target of 3%, with a 1% tolerance band to be phased in over the next two years, was widely anticipated.

“It is hoped this will support a sustained period of lower interest rates in the medium to longer term, providing further stimulus for aspiring homeowners as well as those seeking to relocate in line with evolving lifestyle needs.” 

The property group said that with two further 25bps repo rate cuts anticipated by mid-2026, in an already rebounding residential property market, the outlook for the economy and spin-offs for the housing sector appear increasingly positive, with improved consumer and buyer confidence, and renewed activity expected to support steady growth across key segments of the market.

BUSINESS REPORT