Here's why you should continue paying the same bond instalment even after the rate cut
Paying more into your home loan will bring huge benefits further down the line.
Image: RON AI
With South Africa’s repo rate having been reduced by 25 basis points this week, home owners have a reason to celebrate as the year draws to a close.
Following a Monetary Policy Committee (MPC) meeting on Thursday, Reserve Bank Governor Legetja Kganyaho announced that the repurchase rate (repo rate) would be reduced by 0.25%.
What this means for consumers is that the prime lending rate is now reduced to 10.25%. Cumulatively, the interest rate has fallen by 1.5% since the cutting cycle began in September 2024.
Compared to then, the monthly instalment on an average R1 million home loan, calculated at prime, has fallen by around R1,000. Those with a R2 million loan are now paying around R2,000 less than they were when the cutting cycle began.
But while most consumers will be tempted to direct this money to other expenses, or even a holiday, that is not necessarily a wise move, financial experts warn.
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, advises homeowners to continue paying the same bond instalment that they were before the interest rate cuts.
“This final cut of 2025 is not merely a year-end bonus; it is a strategic tool. The most powerful financial decision you can make is to continue paying the same bond instalment you were paying months ago,” Geffen said.
“By doing so, you are not just managing debt; you are aggressively building personal equity and creating monumental long-term wealth at a dramatically accelerated pace.”
He said a little discipline now would secure a future where your most valuable asset works much harder for you.
But how much can you really save by doing this?
According to FNB, paying an additional R500 into your 20-year bond on a R1 million property will save you R335,000 in interest payments and will shorten your loan period by three years.
Property market gaining momentum
Existing owners could also benefit from higher property values in the coming year as the residential property market steadily gains momentum.
Commenting on the latest repo rate decision, Better Bond’s national sales head Bradd Bendall said home loan applications had grown by 30% since the third quarter of 2025, the highest level since early 2022. The proportion of home loans granted to first-time buyers has grown to 17.4%, he added, and this is an important indicator of market recovery.
“This week’s rate cut is expected to further improve affordability and access to credit, giving buyer confidence another welcome boost as we head into the festive season,” Bendall said.
Lew Geffen Sotheby’s also expects the housing market to steadily gain ground in 2026.
“Improved affordability is slowly rebuilding buyer confidence, and we are already seeing a consistent uptick in serious enquiry levels,” Geffen said.
“This should translate into a more active and stable property landscape in the new year.”
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