More rate cuts on the way, experts predict

The central bank lowered the rates to 7.25%, while prime lending rate has been cut to 10.75%.

The BetterBond group says they already seen a 2.2% year-on-year increase in home loan applications.

BetterBond National Head of Sales, Bradd Bendall, said they expect the repo rate cut to give the market a further boost.

"The drop in the prime lending rate to 10.5% provides welcome relief to homeowners, and sends a strong signal to investors that South Africa is intent on stimulating economic growth.

"Today’s rate cut will provide further impetus. However, homeowners are reminded to continue budgeting wisely as international tariff disruptions create global economic uncertainty."

Chief economist at Bureau for Economic Research (BER) Lisette IJssel de Schepper said repo rate cut means a consumer with R1 million bond will likely save around R170 a month on their bond repayments.

"So it's not huge, but it does help. Of course, the biggest benefit comes in if you continue paying that R170, and then over time you'll be paying considerably less on your loan. So it's providing a little bit of relief on the margin, but not significantly so."

FNB CEO Harry Kellan said this means there could be more repo rates cuts this year.

He said the move comes at a time when there is a more positive inflation outlook for the rest of the year.

"We may still see repo rates reduced once more this year, something we’ll be watching closely in upcoming MPC meetings.”

FNB Chief Economist Mamello Matikinca-Ngwenya said the MPC’s decision to cut interest rates highlights a greater focus on domestic fundamentals. 

"Inflation remains below the bottom of the inflation target range and high-frequency data reflects a weak start to 2025 from a productive sector point of view, which will be worsened by faltering global prospects. Ultimately, the macroeconomic outlook is benign, providing ample space for a continued cutting cycle.

"South Africa’s difficult fiscal trajectory is delaying any improvements in sovereign risk and borrowing costs. The outlook on interest rates will continue to reflect these risks,” she added.

Sanlam Investments Economist Patrick Buthelezi agreed, saying the decision signals further rate cuts later this year.

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