Last updated 23 September 2026 · Written by Kgothatso Moleke · General information, not financial advice
The short version: the Reserve Bank sets the repo rate. Banks add 3.5 percentage points to get prime. Almost every loan in South Africa is priced off prime, so when the repo rate moves, your bond and often your car repayment move with it — automatically, without anyone asking you. A quarter-point change sounds trivial. On a R1 million bond it is roughly R170 a month, and about R41,000 over twenty years.
The chain, in four links
- The Reserve Bank’s Monetary Policy Committee sets the repo rate. It meets roughly every second month. The repo rate is what banks pay to borrow from the Reserve Bank.
- Banks add a margin to get prime. That margin has been 3.5 percentage points for years. Repo at 7.25% gives prime at 10.75%.
- Your loan is priced off prime. A bond is usually quoted as “prime minus 0.5%” or “prime plus 1%”. That gap is fixed at signing; the prime part moves.
- Your instalment recalculates. The bank keeps the end date the same and changes the payment. Your debit order goes up or down on its own.
The part people miss is link 4. Nobody phones you. The new amount simply comes off.
Why a small number is a big number
Interest is charged on the full outstanding balance, every month, for as long as the loan runs. So the percentage is small, but the base is enormous and the time is long.
A guide to what a quarter-point move does, by balance, on a twenty-year bond:
| Outstanding balance | Change per month | Change over 20 years |
|---|---|---|
| R500,000 | about R85 | about R20,000 |
| R1,000,000 | about R170 | about R41,000 |
| R1,500,000 | about R254 | about R61,000 |
| R2,000,000 | about R339 | about R81,000 |
Two things follow. A one-point move is four times the above. And the further into the loan you are, the smaller the effect, because the balance the rate is charged on has come down.
Work out your own figure: the rate change calculator takes your actual balance, remaining term and rate and gives you the exact instalment.
Which of your debts actually move
Your bond moves. Home loans in South Africa are overwhelmingly linked to prime. Fixed-rate bonds exist but are uncommon, and banks price them at a premium for taking the risk off you.
Your car finance depends on what you signed. Vehicle finance is offered both ways. A linked agreement moves with prime; a fixed agreement does not. Your contract says which, and it is worth knowing before a rate announcement rather than after.
Your credit card and overdraft move. Both are linked, and both sit near the legal maximum already, so a rate rise compounds an already expensive debt.
Most personal loans do not move. They are typically written at a fixed rate for a fixed term. The rate you signed is the rate you pay.
Your savings move too, in your favour. Fixed deposits and money-market accounts reprice upward when the repo rate rises. This rarely offsets the debt side unless you are a net saver, but it is real.
Why the Reserve Bank does this at all
Raising rates is the main tool for slowing inflation. Borrowing costs more, so households and businesses spend less, so price rises ease. It is a blunt instrument that works by squeezing everyone in the short term, and the Reserve Bank uses it because it has an inflation target to hold.
This is worth knowing because it tells you what tends to come with it. Rate rises usually arrive in a period where prices are already climbing. So the instalment increase lands on a household that is also paying more for food, fuel and electricity. That combination, rather than the rate on its own, is what breaks budgets. On the fuel side of it, what a fuel increase actually does to your budget separates what hits your tank, your taxi fare and your groceries.
What to do when the rate goes up
Check the number before the debit order does. Work out your new instalment the week of the announcement, not the week it comes off.
Adjust the budget somewhere else first. A rate rise is permanent until the next cut. Covering it out of savings for three months only delays the problem.
Do not let a payment bounce. This is the single most expensive mistake available to you. A missed payment is recorded on your credit record, stays there for years, and raises the rate you are offered on everything afterwards — which means the next rate rise costs you more too. If the new instalment genuinely does not fit, phone the bank before the date rather than after. Banks restructure. They are far less accommodating once you have already defaulted.
If several debts have become unaffordable together, that is over-indebtedness rather than a rate problem, and debt review is the mechanism built for it.
What to do when the rate comes down
Leave your debit order exactly where it is. This is the highest-return move available to an ordinary household, and it costs nothing, because you are already paying that amount.
When the rate drops, the bank lowers your required payment. If you keep paying the old amount, the entire difference goes against the capital instead of the interest. On a bond, consistently paying a few hundred rand over the required instalment typically takes years off the term and saves six figures in interest.
The catch is that the saving is invisible. Nothing arrives to tell you it worked. Which is exactly why most people let the lower payment happen and never think about it again.
The rate you are offered is not the rate everyone gets
Prime is a reference point, not a price. What you actually pay is prime plus or minus a margin, and that margin is set by how risky you look to the lender on the day you apply.
The difference is not small. Between a strong credit record and a weak one, a bond can be two percentage points apart. On R1 million over twenty years that is about R1,390 a month, or roughly R333,000 in total — far more than any single rate decision will ever do to you. That gap is set once, at application, and you carry it for the life of the loan.
Which is why credit repair is worth doing before you borrow, not after. Start with the credit health check, and if there is work to do, the credit repair roadmap sets out the order that works.
Where rates are now
Prime is 10.75% from 25 September 2026, following the Reserve Bank’s 0.25 percentage point increase in the repo rate to 7.25%. What that particular move costs a typical household is set out in the September 2026 rate and fuel breakdown.
The Monetary Policy Committee meets roughly every second month. This page is updated after each decision.
Sources: South African Reserve Bank Monetary Policy Committee statements; National Credit Act 34 of 2005. Figures in the table are calculated on a standard amortising loan and exclude monthly service fees, which do not change when the rate moves.