While short-term risks remain, gradual reductions in the prime lending rate later this year could provide further relief to homeowners.
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Homeowners already facing fuel price pressures and rising living costs linked to tensions between Iran and the United States may also need to factor in the possibility that interest rates could remain higher for longer.
While South Africa’s economy has shown encouraging signs of momentum early this year, escalating tensions in the Middle East have created some uncertainty ahead of next week’s Monetary Policy Committee (MPC) meeting, says Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond.
He says if the conflict places upward pressure on global oil prices, inflation could rise locally, prompting the South African Reserve Bank (SARB) to maintain a cautious stance at its upcoming meeting.
“While market forecasts earlier this year pointed toward a steady rate-cutting cycle, the Reserve Bank is currently revisiting its risk scenarios. If inflationary pressures from fuel and transport costs prove persistent, the prime lending rate may remain unchanged for longer or even rise modestly if inflation risks intensify.”
Amid this global uncertainty, it is encouraging that South Africa enters this period on one of its strongest economic footings in several years.
The country’s real GDP growth is projected at around 1.5% this year, rising to approximately 1.8% in 2027. Four consecutive quarters of GDP growth have helped restore investor confidence and laid a solid foundation for further economic consolidation.
The bond originator says they have also seen renewed activity in the housing market, says Potgieter.
“BetterBond’s home loan applications were up 2.8% year-on-year in January, alongside improving home loan approval ratios. House prices have continued to rise at a steady pace, with average prices up 4.1% year-on-year, while affordability has been supported by rising real incomes and lower deposit levels.”
The group says that economists remain optimistic that the broader interest-rate cycle is gradually turning downward.
“While short-term risks remain, gradual reductions in the prime lending rate later this year could provide further relief to homeowners.”
With a catastrophic, record-setting fuel increase on the cards from April, South Africans are about to feel this fuel increase far beyond the forecourt, says Salem Nyati, Consumer Financial Education Specialist at Momentum Group Foundation.
The specialist says when a customer is looking at petrol potentially rising by close to R4 a litre and diesel over R6 in April, it does not just hit the tank; it feeds directly into the cost of food, transport and almost every essential in their monthly budget.
“We’ve seen this pattern before: fuel goes up, inflation follows, and households that were already stretched suddenly find themselves under real pressure. The risk now is that many consumers try to ‘bridge the gap’ with credit, and that’s where the real danger lies.
Just because you qualify for credit doesn’t mean you can afford it. There’s a big difference between what a lender says you can take on, and what your budget can actually sustain when conditions tighten.”
The foundation says too many people build their finances around a ‘good month’ scenario, and when costs spike like this, that structure collapses. Consumers need to shift from reactive to defensive financial behaviour now, before the full impact filters through, it says.
Homeowners were said to be prioritising mortgage payments, leading to a 20% year-on-year improvement in home loan default.
South African consumer credit trends show a significant shift in repayment behaviour, according to the latest Experian Consumer Default Index (CDIx) for the last quarter of last year (Q4 of 2025).
However, the report reveals a complex picture, with underlying data indicating that many consumers are turning to unsecured credit to manage ongoing economic pressures.
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