South Africa’s housing market is gradually responding to the current interest rate-cutting cycle says ooba Home Loans, who have noticed a growing sense of optimism among buyers.

“With the prime lending rate now at 10.5% – a full percentage point lower than in Q3 2024 – home buying affordability challenges are easing, helped along by subdued inflation and lower fuel prices,” comments Rhys Dyer, CEO of the ooba Group.

Home loan applications in Q3 2025 were up 4% on Q3 2024 and up 7% on Q2 2025. “Although application volumes have not surged in response to the lower rates, the total value of home loan applications received in Q3 2025 has grown by 10% year-on-year, and 6% quarter-on-quarter, reflecting the impact of higher bond values driven by customers purchasing higher priced properties,” he says.

ooba Home Loans’ data for the quarter also reveals an uptick in successful home loan applications when compared to the previous quarter with the average home loan approval rate having increased by 1.1% from Q2 2025 to 83.9% in Q3 2025. Buyers who completed the pre-qualification process before applying continued to hold a clear advantage, achieving a 91.0% approval rate in Q3 2025.

“We also continue to see a healthy ratio of applications declined by one bank but approved by another – at a high of 48.6% in Q3 2025 – underscoring the importance of shopping around for a home loan,” adds Dyer.

He says that the banks remain highly competitive in their interest rate discounting, pointing to ooba Home Loan’s average interest rate of prime minus 0.69% secured for its homebuyers in Q3 2025 – a notable year-on-year improvement of 0.14 percentage points. Home loan approvals are also being granted at increasingly attractive terms and conditions – zero deposits and cost-inclusive home loans are on the rise with 56% of home loan quotations accepted by borrowers in Q3 2025 having fallen into the 100% and greater loan-to-value band, 5% up on the ratio recorded in Q3 2024.

The average purchase price during Q3 2025 was R1 674 442 – representing a 4.4% year-on-year increase and an even higher uptick (up 4.8% from Q3 2024) in average approved bond sizes and the first nine months of 2025, all regions (except Gauteng South and East) have recorded price growth exceeding consumer inflation rates.

“Unsurprisingly, it is the Free State – still retaining the title of the most affordable housing market in the country – that has registered the most growth given its relatively low starting point – with house price inflation in the region up 8.6% year to date.”

First-time homebuyers are also gradually returning to the market, making up 46.8% of all ooba Home Loans’ applications to date in 2025 – up from 45.8% in 2024 with more generous lending by the banks to first-time home buyers making homeownership more accessible. For instance, the average first-time buyer deposit of 8.9% of the purchase price for Q3 2025 represents a -13.6% year-on-year decline. Dyer says these buyers are also spending more with the average purchase price for Q3 2025 at R1 229 267, a 4.1% year-on-year increase.