Another interest rate cut – in time for the holidays!

In a move largely predicted by economists and industry experts, the Reserve Bank Monetary Policy Committee has continued where it left off in September with another 0.25% decrease in interest rates. The decision, which reflects a conservative approach by the central bank to its newly implemented rate-cutting cycle, takes the prime lending rate down to 11.25%.

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“South Africans may have been hoping for a more significant reduction in rates today, but the cut will still be welcomed by consumers ahead of the festive season – especially by those who are already managing notable debt,” says MortgageMax CEO, Jors van Niekerk. “The latest announcement leaves South Africans in a much better place than they were 12 months ago, and the further drop in rates today will bring a renewed sense of financial relief,” he adds.

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Today’s decision comes on the back of annual consumer inflation having fallen for a fourth consecutive month to 3.8% in September. This was down from 4.4% in August and below the forecasted figure of 3.9%. It’s also the lowest inflation has been since March 2021. Looking ahead to 2025, many economists are predicting that inflation will remain well within reach of the 4.5% mid-point of the Reserve Bank’s target range of 3% to 6%. If this is the case, South Africans can look forward to further interest rate cuts in 2025.

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“With indicators pointing to a more stable and potentially more favourable market next year, and more affordable borrowing costs making it easier for consumers to handle debt and consider long-term investments like property, the outlook is positive for first-time homebuyers, investors and those looking to move up the property ladder. That said, South Africans would do well to remember that ‘Januworry’ is the longest month of the year and that while debt may be slightly more manageable, a cautious approach to spending over the festive season will set them up for success as they head into 2025,” concludes Van Niekerk.