Prime Rate 10.75%: What the September 2026 Hike Costs You
The South African Reserve Bank raised the repo rate by 25 basis points to 7.25% on 23 September 2026, and the prime lending rate went up to 10.75% from 25 September. If your business has an overdraft, vehicle finance or a loan linked to prime, your repayments have gone up. Here is what it costs and what to check now.
What the Reserve Bank decided
The Monetary Policy Committee's decision was unanimous. Headline inflation is at 4.4%, above the Reserve Bank's 3% target, and the committee pointed to intensifying fuel price shocks, higher global interest rates and supply chain disruptions from geopolitical conflict. It also revised its economic growth forecast down to 1.2%, from 1.4%.
"It is crucial that inflation reverts to 3% as the current shock fades," Governor Lesetja Kganyago said, adding that decisions will continue to be taken meeting by meeting.
Rate | Before | After |
|---|---|---|
Repo rate | 7.00% | 7.25% (from 25 September 2026) |
Prime lending rate | 10.50% | 10.75% (from 25 September 2026) |
SARS official rate of interest | 8.00% | 8.25% (from 1 October 2026) |
What it costs your business
A 0.25 percentage point increase adds roughly:
R1,250 a year for every R500,000 of debt linked to prime
R2,500 a year for every R1 million
R5,000 a year for every R2 million
These are simple interest figures on the outstanding balance. The exact amount depends on your facility, the margin your bank charges relative to prime and how your balance moves during the year.
Three things to check this week
Which of your facilities are linked to prime. Overdrafts, revolving credit, vehicle finance and asset finance are often variable. Ask your bank which of yours are fixed and which are not.
Your cash flow forecast. Update it with the new rate for the next six months. A small increase is easier to absorb when you can see it coming.
Loans between you, your company, your trust and your staff. The SARS official rate of interest rises to 8.25% from 1 October 2026. Low-interest or interest-free loans to employees create a taxable fringe benefit based on this rate, and loans to a trust at less than the official rate can trigger donations tax under section 7C. Payroll and loan calculations should use the new rate from October.
Why up-to-date Bookkeeping matters when rates move
When interest rates change, it helps to be able to answer three questions quickly: how much debt the business carries, what that debt costs each month, and what the cash position looks like three months from now. Those answers come from up-to-date bookkeeping and monthly management accounts rather than from the bank statement at month end.
What happens next
The Reserve Bank expects inflation to stay elevated through 2027, driven by fuel and services, before returning to the 3% target towards the end of 2027. The next Monetary Policy Committee decision is due in November 2026.
Frequently asked questions
What is the prime rate in South Africa now?
10.75%, effective from 25 September 2026.
What is the repo rate?
7.25%, after a 25 basis point increase announced on 23 September 2026.
Does the increase affect fixed-rate loans?
No. A fixed rate stays at the agreed rate for the fixed period. Only debt linked to prime or another variable rate changes.
When does the SARS official rate of interest change?
It moves to 8.25% from 1 October 2026. The official rate is the repo rate plus one percentage point.
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Sources: SAnews, "MPC raises repo rate to 7.25%", 23 September 2026; South African Reserve Bank Monetary Policy Statement, September 2026. See also: South African Reserve Bank: Statement of the Monetary Policy Committee, September 2026.
