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What a 1% repo rate move does to your bond

The Reserve Bank sets the repo rate. Your bank's prime rate tracks it, and your bond repayment tracks prime. When the MPC moves, your payment moves a few weeks later, and the rand amounts are larger than most buyers expect.

Updated 15 June 2026 · THL Property Group

Almost every South African home loan is a variable-rate loan linked to prime. Prime sits 3.5 percentage points above the repo rate, so when the Reserve Bank's Monetary Policy Committee changes the repo rate, prime changes by the same amount within days, and your bank resets your repayment from the next cycle.

As at June 2026 the repo rate is 7.00% and prime is 10.50%. Most buyers are quoted a rate close to prime, a little above or below it depending on their profile and deposit.

The MPC meets about every two months. A single decision usually moves the rate by 0.25%, occasionally 0.50%. That sounds small. On a home loan it is not.

What 1% actually costs

Take a 1% rise, from a 10.50% rate to 11.50%, on a 20-year bond:

The number worth carrying in your head: about R680 a month for every R1 million you owe, for each full percentage point, on a 20-year bond. A R2 million bond gains R1,361 a month from a single 1% move. Over the life of the loan that one percent costs more than R326,000, for nothing you can see or touch.

Even a 0.25% hike, the smallest the MPC tends to make, adds around R170 a month per million. Two of those in a year and you are paying R340 a month more than you planned, per million owed.

A longer term feels it harder

Stretch the same loan to 25 years and the monthly payment drops, which is exactly why banks offer the option. The trade is that a rate rise then bites for longer. On a R1 million bond over 25 years, the same 1% move adds R723 a month and about R217,000 over the term, against R163,000 over 20 years. A longer term buys you a smaller payment today and a larger bill from every future hike.

What to do with this

• Stress-test before you buy, not after. If a 1% rise would break your budget, you are buying at the very top of your range. Build in two percentage points of headroom.
• Put down a bigger deposit. The rand cost of every future hike scales straight off the balance, so R200,000 less owed is about R136 a month saved on a 1% move, every month, for the whole term.
• Pay a little extra each month. It shortens the term, which shrinks the window a future hike has to work in. The habit that clears the bond early also softens rate shocks.

The repo rate is not yours to control. The size of the loan you carry into the next hiking cycle is, and that is where the decision actually lives.

Put your balance, rate and term into the Rate Shock calculator to see what a move of your choosing does to your own repayment, or use the Bond Repayments calculator to test a bigger deposit or extra payments.

Money Cat is an information tool, not financial advice. The rates shown are the SARB repo and prime as at June 2026, and your own quoted rate will differ. Confirm current rates with the SARB or your bank.