The prime lending rate has moved from 10.5% to 10.75%. For homeowners, it adds a little to the monthly repayment. For buyers, it matters in a different way: it changes how much the bank will lend you.

The change is real, but smaller than most headlines suggest.

Why buyers feel it differently

When you apply for a home loan, the bank doesn't start with the price of the home. It starts with the repayment you can afford.

Under South Africa's National Credit Act, banks must assess whether you can afford the loan. As a common guideline, most banks keep the bond repayment at around 30% of your gross monthly income. They then work backwards from that repayment to the loan amount.

When the rate rises, the same repayment buys a slightly smaller loan.

What it does to your borrowing power

Based on a 20-year bond at prime:

Figures are rounded. Your actual qualifying amount depends on your bank, credit profile, deposit, and the rate you're offered.

Across every price band, the drop is roughly 1.6%.

Looked at the other way: to qualify for a R2 million bond, you'd now need a gross income about R1,100 a month higher than before, around R67,700 instead of R66,600.

What it changes, and what it doesn't

It's unlikely to change which suburb you can buy in. A 1.6% shift doesn't move you out of an area.

It may change which home in that suburb fits comfortably. If you were already at the top of your budget, a home that just fit last month might now sit slightly above it.

Three ways to protect your buying power

  • Get pre-approved now. You'll know exactly what you qualify for at today's rate before you start viewing.
  • Use a bond originator. They submit your application to several banks at once. A better rate from one bank can outweigh the entire 0.25% increase.
  • Put down a larger deposit if you can. Every rand of deposit reduces the bond, which offsets the higher rate directly.

The increase trims a buyer's borrowing power by about 1.6%. That's roughly R33,000 on a R2 million bond.

It's worth planning for. For most buyers, it's not a reason to stop looking. Get pre-approved, shop your bond, and buy with a clear number.