How the latest interest-rate hike will affect your car and home-loan repayments

Homeowners and motorists will face higher monthly payments after the South African Reserve Bank's latest interest rate hike. A homeowner with a R1.5 million bond will pay R253 more per month, while a R500,000 vehicle loan will see an increase of R64. The prime lending rate has risen to 10.75% after the bank's decision to hike the repo rate by 25 basis points.

SARB Governor Lesetja Kganyago noted that inflation is expected to hit 5% before moderating to 3% by the end of 2027, driven by rising fuel prices. Stats SA reported that South Africa's inflation rate increased to 4.4% in August, up from 4.3% in July. FNB Chief Economist Mamello Matikinca-Ngwenya explained that the decision reflects the need to reinforce policy credibility amid intensified external inflation risks and expectations above the SARB's 3% target.

For a R250,000 vehicle loan, the monthly payment will increase by R32, while a R500,000 loan will see a rise of R64 and a R1 million loan will increase by R127. Over a six-year term, these increases will add R2,292 to the interest bill on a R250,000 car and R4,583 on a R500,000 vehicle. A R800,000 home loan at prime over 20 years will result in a monthly instalment increase of around R135, while an R1.5 million loan will incur an extra R253, and a R3 million loan will require an additional R505.

Samuel Seeff, chairman of the Seeff Property Group, warned that the rate hike will burden already overburdened consumers and dampen economic and property market activity. FNB CEO Lytania Johnson stated that the hike does not signal a prolonged tightening cycle, given subdued economic growth and elevated unemployment. Dr Andrew Golding, CEO of the Pam Golding Property Group, noted that while the higher rate will strain prospective homeowners, particularly first-time buyers, banks are supporting the housing market with competitive lending and products that ease upfront financial barriers.