This afternoon, the Monetary Policy Committee of the South African Reserve Bank (‘SARB’) convened its first sitting of 2026. Against the backdrop of discussions around the removal of the prime lending rate, SARB has cautiously opted to keep the repo rate unchanged, defying expectations of continued interest rate relief from some economists. The repo rate accordingly remains 6.75%, while the prime lending rate is 10.25%.
Though the decision may initially disappoint homeowners, estate agents, and aspiring purchasers, STBB Director and real estate expert, James Phillipson, believes it may ultimately benefit the property market more than a premature repo rate cut.
Inflation risks loom
SARB’s decision reflects a desire to minimise policy uncertainty by ensuring inflation is firmly on a downward path before lowering rates. Following the introduction of a new inflation target last year, headline inflation, which is up slightly from 3.5% in November to 3.6% in December, remains vulnerable to global pressures, such as volatile oil prices, geopolitical shocks, and anticipated currency sensitivity.
‘SARB cannot afford to move too early and undo the progress made on inflation,’ explains Phillipson. ‘From a legal and economic standpoint, predictable inflation is far more valuable to property owners than short-term interest rate relief that could destabilise the market.’
By holding the repo rate steady, SARB signals that it is prioritising inflation credibility and policy sequencing over premature easing – an approach that reassures lenders, investors, and institutional property purchasers.
Stability over speed
For Phillipson, swift rate cuts could distort price discovery in certain high-demand nodes like Cape Town’s City Bowl and Atlantic Seaboard, Stellenbosch, and Midrand in Gauteng.
‘A steady repo rate creates a disciplined buying environment,’ notes the real estate attorney. ‘It ensures that purchasers entering the market are financially resilient, which reduces the likelihood of distressed sales and protects overall property values.’
The silver lining
While rates have not come down, the pause offers a strategic opportunity for prospective purchasers and sellers alike.
‘Stability is the silver lining here,’ offers Phillipson. ‘Buyers and homeowners with mortgaged property can plan with confidence, knowing bond repayments are unlikely to change in the near term.’
While economists remain divided over the timing of future repo rate cuts, SARB’s cautious approach may ultimately lay the groundwork for a more resilient property market in the years ahead.
For expert legal guidance in property-related matters, contact our expansive team of conveyancing attorneys at info@stbb.co.za today.
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