Disappointed, missed opportunity as rates hold steady

An interest rate cut was anticipated given the favourable economic indicators. The Reserve Bank’s decision to keep the repo rate unchanged at 6.75% (prime at 10.25%) is therefore hugely disappointing and a massive, missed opportunity to align interest rates, says Samuel Seeff, chairperson of the Seeff Property Group.

There has been significant improvement on the economic front, and while the US Federal Reserve opted to hold its rate unchanged, local conditions are far more conducive to a rate cut. Given the positive domestic economic indicators, the Bank could easily have departed from the global trend by cutting the rate, he says.

We are off the Grey List, the Rand has strengthened to below R16.00 to the US Dollar (the first since mid-2022), and inflation is under control at a two-decade low. Despite a marginal uptick to 3.6% it remains within the Bank’s new lower target range of 2–4%. Coupled with the oil price, which is nearly 18% lower than in January 2025, it is clear the Bank had the “breathing room” it needed to be decisive.

Despite the cuts last year, the interest rate remains stubbornly above pre-pandemic levels and continues to hinder economic growth which remains well below what is needed to address the growing unemployment.

While the lower rate has eased consumer debt slightly and improved property affordability and sales, Seeff says the overall volumes remain well below where they should be. Compared to 2021, transaction volumes are effectively still trading 26.5% lower (23,154 monthly transactions in 2021 vs 18,302 in 2025).

Given the repo versus prime rate debate, the Bank itself acknowledged that the rate is too high and a strain on consumers and the economy which needs relief to reduce debt and unlock investment.

We need 4–5% growth for a decade to combat unemployment, and must move beyond talking to decisive action. Seeff says the goal must be to move closer to the 7% prime rate which successfully kickstarted the economy and resulted in GDP growth of nearly 5% in 2021.

Looking ahead, Seeff strongly urges the Bank not to repeat this hesitation at its next meeting in March. The Bank must take advantage of this critical window and provide at least two rate cuts of 25 bps in the first half of the year. The data supports a move now, and delaying relief until mid-year risks remaining “unnecessarily restrictive” at a time when consumers and the economy can least afford it.

The interest rate remains the most important variable for the property market as we can clearly see from the fact that overall transactions in 2025 were still 26.5% lower compared to 2021 when the interest rate was at 7%.

Seeff says while sales volumes and mortgage applications have improved, more rate cuts are needed to further stimulate affordability and the market. Mortgage lending conditions remain favourable with higher approval rates and lower deposit requirements which is still good news for buyers while declining stock levels provide continued opportunities for sellers.

Issued by Gina Meintjes