Lending Rates in South Africa – 1994 to 2025

What are lending rates?

Lending rates, also referred to as lending interest rates, refer to the interest rates charged by financial institutions, such as commercial banks, for lending money to individuals, businesses, and other entities.

Put differently, a lending rate is the rate of interest that a borrower has to pay when repaying a loan. The interest rate is generally expressed as a percentage of the principal amount of the loan.

Interest is also called the ‘cost of money.’

Note: Interest rates that refer to yield on investments are not discussed in this article.

What is the prime lending rate?

The prime lending rate, also known as the predominant rate, prime interest rate, or prime rate, is the benchmark rate that commercial banks and other financial institutions charge on loans held by clients (businesses and individuals) who have high creditworthiness.

The prime rate in South Africa is 350 basis points above the repo rate of the South African Reserve Bank (SARB). As of February 2025, the prime rate is 7%.

The prime lending interest rates charged by private sector banks are linked to the repo rate of the SARB. When the repo rate is adjusted (upward or downward) by the SARB, the banks and other financial institutions adjust their prime rates accordingly.

Financial institutions, such as commercial and private banks, use the prime rate as a benchmark to determine the lending rates to be charged to their customers. Individuals and businesses more prone to default will be charged higher lending rates than clients with healthier credit records.

Furthermore, clients with excellent credit records can even be charged with lending rates below the official prime rate.

Hence, commercial banks will offer different lending rates on loans to clients, depending on the creditworthiness of the client. Put differently, there is no standard lending rate that applies to all borrowers.

What is the base lending rate (BLR)?

The base lending rate (BLR) is the minimum interest rate that financial institutions use as a base to determine how much interest they will charge for loans to clients.

What is the difference between the repo rate and the prime lending rate?

The repo rate[1], short for repurchase rate, is the interest rate at which the South African Reserve Bank (SARB) lends money to the private sector banks in South Africa.

As mentioned, the repo rate is 350 basis points below the prime interest rate charged by banks and other financial institutions. The margin between the SARB’s repo rate and the prime interest rate was increased from 300 basis points to 350 basis points on September 5, 2001.

The repo rate is determined by the Monetary Policy Committee (MPC) of the SARB. According to the SARB’s website, its MPC consists of ‘up to seven members from the SARB: the Governor, the three deputy governors and selected senior officials appointed by the Governor.’ The current Governor is Mr EL (Lesetja) Kganyago.

Normally, six MPC meetings are scheduled during a year (January, March, May, July, September, and November) in order to fulfill the mandate of the SARB to protect the value of the South African currency (the ZAR) and to accomplish the main purpose of the Reserve Bank, namely ‘to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa.’

In order to achieve the SARB’s main purpose, an inflation target of 3% to 6% per annum is set by the SARB. According to a statement of the MPC after its latest meeting on January 21, 2025, headline consumer price inflation averaged 3.3% in 2025. This is the lowest inflation rate since 2004.

Historical prime lending rates in South Africa

The following table indicates how prime lending rates in South Africa have changed and fluctuated during the past 27 years: 1994 to 2025.

Observations about the prime lending rates in South Africa for the past 27 years: 1994 – 2025

1. The prime rate was 25% at the start of 1994 and decreased to 7% at the end of 2025. A decrease of 825 basis points. Expressed as a percentage, the rate is 54.10% lower at the end of 2025.
2. The rate of 7% (since July 24, 2025) is the lowest for the 27 years, while the prime rate of 50% (August 1998 to October 1998) was the highest for the period. A huge difference of 1 850 basis points. Put differently, from August 1998 to July 2025, the prime rate in South Africa plunged by 72.55%.
3. The prime lending rate was adjusted 74 times over the period of 27 years, an average of 74 times per year.
4. The average prime lending rate for the 27 years is 14.48%.
5. The most adjustments (eight) occurred during 1999, followed by seven adjustments during 1998 and five adjustments in 2003, 2009, and 2025, respectively. During 1998 – 1999 the prime lending rate fluctuated between 15.50% and 25.50%, a considerable difference of 1 000 basis points.
6. However, since January 2010 the prime lending rate only fluctuated between 10.50% (18 March 2016 – 21 July 2017) and 7% (from 24 July 2025), which is a difference of 350 basis points.
7. The longest time span between two rate adjustments was 609 days – 19 November 2010 to 20 July 2012.
8. From January 2002 to July 2025, the average time span between two adjustments was 141 days.
9. The biggest adjustment in the prime lending rate was in June 1998 when the prime rate was increased by 400 basis points from 18.25% to 22.25%.
10. During the time period of 27 years, the prime interest rate was:

• 11 times 20% or above 20%, the last time was during March 1999 – April 1999.
• 49 times between 10% and 20%.
• 15 times 10% or below 10%. The first time was in March 2010.

11. The number of adjustments per year are as follows:

[1] Refer to the article, ‘South Africa’s Repo Rate – A Useful Guide’, for more information about the SARB’s repo rate.