Fixed vs variable home loan rates

A variable rate moves with prime — 10.75% since 25 Sept 2026 — so your instalment changes at every SARB MPC decision. A fixed rate locks your instalment for 12 to 60 months, usually at 0.5%–2% above the variable rate. bond.co.za’s calculator shows what each choice costs on your bond.

By Neil B · Checked against published primary sources · Published 2026-10-24 · Last verified 2026-10-24

Free, on screen, no signup — and you can test a rate move against your own bond before you choose.

On a variable rate, your home loan is priced at your bank’s prime rate plus or minus a margin, and it moves every time prime moves. Prime is currently 10.75% (South African Reserve Bank (SARB), effective 25 Sept 2026). When the South African Reserve Bank’s Monetary Policy Committee (MPC) changes the repo rate, banks adjust prime by the same amount on the same effective date — and every variable bond reprices with it, up or down.

On a fixed rate, the bank quotes you a rate that stays put for a set period — typically 12 to 60 months. Your instalment cannot rise while the term runs — but it also cannot fall, and the trade is not free: banks quote fixed rates at a premium of roughly 0.5% to 2% above their variable rate (ooba Home Loans, retrieved 13 Apr 2026). When the term ends, your rate reverts to variable.

• Variable: cheapest on day one, moves with prime at every MPC decision, benefits you when rates fall.
• Fixed: costs a premium, cannot rise during the term, protects a tight budget — and misses the saving if rates fall.
• Either way, your starting rate depends on your credit profile and deposit: offers across the major banks run from prime − 1.0% to prime + 2.0%, and approved borrowers average 0.67% below prime (ooba).

Most South African home loans default to a variable rate. The chain works like this: the SARB’s MPC sets the repo rate — currently 7.25% — and commercial banks set prime at repo plus a fixed spread of 3.5 percentage points, giving today’s prime of 10.75%. Your bond is then quoted as prime minus or plus a margin: across the major banks, offers typically land between prime − 1.0% and prime + 2.0%, and where you fall in that band reflects your credit record, deposit and affordability profile.

The defining feature is what happens next. When the MPC moves the repo rate, your rate and instalment change on the effective date — in both directions. In 2026 that has meant two 25 basis point increases (May and September), taking prime from 10.25% to 10.75%. The upside of the same mechanism is that when the MPC cuts, a variable instalment falls automatically — no renegotiation needed.

How prime is set, who votes, and when the MPC next meets are covered in our prime rate guide and the repo rate guide.

A fixed rate is a bet the bank prices deliberately. You get an instalment that cannot rise for the fixed term — 12 to 60 months is the typical range — and the bank, which carries the rate risk instead of you, charges for it: a premium of roughly 0.5% to 2% above the variable rate (ooba Home Loans). The exact premium depends on the bank, the term you choose and your profile.

Three practical points matter as much as the premium. First, the fix is temporary: when the term ends, the rate reverts to variable at whatever prime then is. Second, if you believe rates will fall, a fixed rate works against you — you keep paying the locked rate while variable bonds get cheaper. Third, ask the bank how extra payments and early conversion are treated during the fixed term before you commit; the terms differ by lender, and they are exactly the flexibility a variable bond gives you by default.

At today’s prime of 10.75%, a R 1 500 000 bond over 20 years costs R 15 228 a month. The table shows that same bond as a variable loan (including one 25 basis point rise) and as a fixed loan at both ends of the typical premium band.

Read the table as the price of each choice, not a quote: your own rate depends on your profile, and your bank’s fixed quotation may sit anywhere in — or outside — that band. Run your own numbers in the bond repayment calculator before deciding.

The fixed-vs-variable choice is easiest to understand through what actually happened this year. The MPC met four times in 2026 so far, and prime rose twice:

On a R 1 500 000 variable bond, each of those 25 basis point rises added about R 254 a month — roughly R 509 a month more between March and September. A borrower who fixed in March kept their instalment through both hikes, but paid the fixed premium every month prime stayed put. Neither side “won” on its own terms; one bought insurance, the other kept flexibility and absorbed the moves.

The next scheduled MPC announcement is 19 Nov 2026, per the South African Reserve Bank (SARB) — MPC announcement webcasts. What it will decide, nobody can tell you — and this page does not predict it. For the scenarios bank economists publish, see the interest rate forecast for South Africa. This page is refreshed after every MPC decision so the figures stay current.

Strip the forecasts away and the decision comes down to two questions: would a rate rise break your budget, and do you value a known instalment more than the chance of a cheaper one?

One lever beats both: the margin you are offered. Approved borrowers average 0.67% below prime across ooba-registered bonds, within the major-bank band of prime − 1.0% to prime + 2.0%. Getting your application priced at more than one bank — what a bond originator does for you — can be worth more than the fixed-vs-variable decision itself. How to push on that margin is in our guide to negotiating your home loan interest rate.