How it works now

For a long time, South Africa based everyday loans on two rates: the repo rate (set by the SARB) and the prime lending rate (used by banks to charge customers). The gap between them stayed at 3.5 percentage points. When the central bank changed the repo rate, the prime rate moved the same amount. That made rate changes easy to track, but it also meant many people didn’t fully understand the true cost of borrowing.

The new way forward

Now, the plan is to shift away from relying on the fixed prime rate. Instead, borrowing costs would mostly follow the repo rate, with loans priced more like real market costs. This should make the true cost of a loan clearer and let interest move more in line with what’s happening in the economy.

For borrowers, this could mean:

Interest that moves with the real market conditions

Easier budgeting, since changes in rates would be easier to predict

A straightforward view of how much a loan really costs

In short, the old system kept rates tied to one central measure. The new idea puts the repo rate front and center, aiming for clearer, more predictable changes and better information to help you make smart financial choices.