Will interest rates drop in January?

The South African Reserve Bank (SARB) is set to announce its first Monetary Policy Committee (MPC) decision of the year on 30 January 2025.

As of January 2025, the interest rate in South Africa is 11.25%. Use our Bond Calculator to estimate how this interest rate affects your home loan affordability.

Expert opinion

• "The MPC has consistently taken a cautious approach in each of these meetings. While many had hoped for larger and more timely rate cuts, the outcomes have repeatedly fallen short of expectations," says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
• In their previous statement released in November, Lesetja Kganyago, Governor of the South African Reserve Bank, stated that the "forecast sees rates easing further in future, stabilising a bit above 7%. But this rate path from the Quarterly Projection Model remains a broad policy guide."
• Given that the Reserve Bank sees interest rates dropping to around 7% within the near future, there is reason to be cautiously optimistic about a possible rate cut in January.
• Inflation is still well within the Reserve Bank's target range, sitting at 2.8% in November 2024. But, the Rand has also weakened against the dollar and oil prices remain volatile.

While further interest rate cuts cannot be guaranteed, Goslett eases consumers by saying that, "unless circumstances take a dramatic change for the worse, it is not expected that interest rates will increase any further this year. At best, we should see the repo rates drop to around 7% over the course of the year, and at worst, repo rates should hopefully just remain unchanged at the current rate of 7.75%," says Goslett.

"Ultimately, my hope is that we will start to steer away from an overly cautious approach and give the economy a much-needed boost by cutting rates more aggressively over the course of this year," Goslett concludes.

What this means for South African homeowners

If interest rates are cut, homeowners and buyers could benefit from lower bond repayments, making property investment more accessible. This could also lead to increased demand in the housing market, potentially driving property sales growth. Conversely, if rates remain unchanged, stability may provide a level of predictability for those planning long-term investments.

For more information on monetary policy, visit the South African Reserve Bank (SARB) official website. Additional resources on government fiscal policies are available through the National Treasury.

Conclusion

Whether rates drop, remain steady, or take another direction, staying informed empowers you to make strategic decisions in 2025.