The Reserve Bank’s decision to leave the interest rate unchanged comes as no surprise and does in no way detract from the very positive indicators for the property market during 2026, says Chris Tyson, founder CEO of national property group, Tyson Properties.
Although many economists predicted that the Reserve Bank Monetary Policy Committee (MPC) would err on the side of caution and start the year without many major change, Tyson expects another cut in the benchmark repo rate by 25 basis points from 6.75% to 6,5% to come as early as March.
This will follow a 25-basis-point reduction in November 2025 and hinges on the continued strong performance of the rand on the back of a weakening dollar due to global political uncertainties as well as the continued record levels achieved by the gold price.
“Right now we are entering an extremely interesting time for the property sector. The Reserve Bank’s announcement in Davos that it is looking into scrapping or restructuring the prime lending rate in order to modernize the financial system suggests a realignment of the whole home loan system this year.
The prime rate – which is 10.25% - is the benchmark for the rate that banks offer clients. When applying for a home loan, clients are offered a rate that centres on the prime rate and is then adjusted depending on the cost of funding, risk appetite and creditworthiness.
Tyson says that this move – which will increase competition for loans between lenders and see banks offering more market related options to potential clients - comes at a time when there is evidence of greater demand for home loans as well as greater enthusiasm on the part of financial institutions to lend.
However, he believes that, in itself, scrapping the prime rate will not materially impact the cost of debt but will rather give credit worthy clients more bargaining power from the outset.
What is potentially more significant is how the Reserve Bank’s new 3% inflation goal beds down and is reflected in further interest rate cuts throughout the rest of the year.
“It is this that will revive the market and give both existing and new homeowners a little relief. Towards the end of last year, inflation edged above the Reserve Bank’s 3% new target which explains the pause in interest rate cuts this month. But inflation is expected to level off during the latter half of 2026 sparking further cuts. This will not only tempt first time home buyers into the market but give existing property owners a strong basis for deciding to downsize, upgrade their properties or even move to other parts of the country in pursuit of better lifestyles,” he says.
