South African Repo Rate,
Prime Rate & SARS Interest Rates

The repurchase rate — universally called the repo rate — is the rate at which the South African Reserve Bank provides overnight liquidity to commercial banks. When a commercial bank needs short-term funding, it sells qualifying securities (typically government bonds) to the SARB under an agreement to repurchase them the following day at the repo rate. The rate the SARB charges for this facility is therefore the floor beneath all lending rates in the South African banking system.

The SARB's Monetary Policy Committee sets the repo rate at scheduled meetings held every six to eight weeks across the year. The MPC is composed of the Governor, three Deputy Governors, and two external members. Decisions are by majority vote, with the Governor casting a deciding vote in a tie. The decision is announced at a press conference on the third day of each meeting, typically at 15:00, and takes effect the following business day or as stated.

The repo rate was cut aggressively during the COVID-19 pandemic to 3.50% in July 2020, then held at that historic low before an aggressive hiking cycle began in November 2021. By May 2023 the rate had reached 8.25%. A cutting cycle began in September 2024, bringing the rate to its current level of 6.75% effective 20 November 2025 — where it was held by unanimous decision at the March 2026 MPC meeting.

Prime lending rate is not set by the SARB. It is a commercial convention: South African banks add a fixed margin of 3.5 percentage points to the repo rate to derive prime. At a repo rate of 6.75%, prime is therefore 10.25%. This margin has been stable for many years. When the MPC adjusts the repo rate, every major bank adjusts prime by the same basis points on the same effective date.

Most South African variable-rate credit is priced off prime. Home loans are typically offered at prime minus a negotiated margin — a creditworthy borrower might achieve prime minus 0.5%, giving an effective rate of 9.75% at current levels. Overdrafts and business credit facilities often carry a margin above prime — prime plus 1% to prime plus 3% is common. Understanding prime is therefore essential for any practitioner advising clients on debt structuring, bond affordability, or interest cost projections.

The practical impact of a 25 basis point (0.25%) move in the repo rate on a R1,500,000 variable-rate home loan over 20 years is approximately R200–R230 per month in repayment change. Over a full 1% rate move, this accumulates to more than R150,000 in additional interest over the life of the bond. Worked example below.

The official interest rate is defined in the Income Tax Act as the repo rate plus 1 percentage point. At the current repo rate of 6.75%, the official rate is 7.75% per annum, effective 1 December 2025. SARS uses this rate for two primary purposes: calculating the taxable fringe benefit when an employer grants an employee a loan at below the official rate under Section 7(2) of the Income Tax Act, and assessing Section 7C arrangements where loans are made to trusts at below-market rates.

SARS prescribed interest rates are separate from the official rate and are gazetted by SARS independently. They do not automatically track the repo rate — they are updated by SARS notice, typically following a pattern related to SARB rate movements but on their own schedule. As at March 2026, SARS charges 10.25% per annum on late or underpaid taxes, and pays 6.25% per annum on overpaid provisional tax refunds. If a taxpayer successfully objects or appeals, SARS pays the higher 10.25% rate on the resulting refund.

Estate duty interest is a separate statutory rate fixed in Section 10(1) of the Estate Duty Act at 6% per annum — it does not track the repo rate and requires a legislative amendment to change. This matters for executor fee planning when an estate cannot pay estate duty within 12 months of the date of death.