Most South African homebuyers are familiar with bonds priced off the Repo rate - the benchmark used by traditional banks. But SA Home Loans (SAHL), one of the country's biggest non-bank lenders, historically priced its bonds off JIBAR instead.

With JIBAR being phased out in December 2026 and replaced by new benchmarks like ZARONIA, many homeowners are wondering: Why did SAHL choose JIBAR in the first place? And what does the change mean for borrowers?

Here's the clear, simple explanation.

SA Home Loans Is Not a Traditional Bank - So It Couldn't Use Repo

Banks like FNB, ABSA, Nedbank and Standard Bank fund home loans using customer deposits. Those deposits are directly tied to the Repo rate, so home loans naturally price off Prime = Repo + margin (typically 3.5%).

But SA Home Loans operates differently.

They do not fund their lending through customer deposits. Instead, they raise money through the capital markets, using:

  • Mortgage-backed securities (MBS)
  • Institutional investors
  • Wholesale funding
  • Bond issuances

And the capital markets are not priced off Repo. They are priced off JIBAR, the Johannesburg Interbank Average Rate.

➡️ SAHL used JIBAR because that's the benchmark used to price the money they borrow.

JIBAR Provided a Market-Driven, Tradable Benchmark

Unlike Repo, which is a policy rate adjusted by the MPC, JIBAR was:

  • Market-driven
  • Set daily
  • Reflective of liquidity conditions
  • Used across South Africa's interest-rate derivatives

This made it ideal for SAHL's funding model, especially for securitisation structures where investors demand:

  • transparent benchmarks
  • mark-to-market pricing
  • consistent forward curves
  • familiar reference rates

Repo simply doesn't offer that.

It Allowed SAHL to Offer Comparable Rates

Because SAHL priced internally off JIBAR rather than Prime, and promised consumers a quarterly reset to smoothy out daily changes, they could often advertise comparable rates, somtimes as low as Prime – 1.2% to Prime - 1.5%.

It Also Matched Their Interest Rate Hedging Strategy

The South African derivatives market historically used JIBAR for:

  • interest rate swaps
  • interest rate futures
  • caps & collars
  • long-term hedging instruments

For a lender that securitises billions in mortgages, the ability to hedge JIBAR exposure was crucial. Repo was not a hedgeable rate in the same way.

So Why Is JIBAR Being Discontinued?

The South African Reserve Bank is phasing out JIBAR on 15 December 2026 to align with global benchmark reforms (similar to LIBOR's termination). JIBAR is essentially being discontinued because it's no longer a reliable or representative benchmark: the market it's based on has become illiquid, it relies on quoted estimates from a small group of banks rather than real transactions, and it carries built-in credit and term risk that make pricing and hedging less transparent.

To modernise the system and align with global reforms, SARB is replacing it with ZARONIA, a transparent, transaction-based overnight rate that better reflects the true cost of funds and reduces manipulation risk.

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What Does This Mean for Homeowners?

If you currently have a SAHL bond linked to JIBAR:

  • SAHL will migrate your loan to a ZARONIA-based equivalent
  • Your day-to-day repayments should remain broadly consistent
  • The underlying benchmark simply becomes more transparent and globally aligned

For new buyers:

  • Repo-linked bonds remain the most predictable over a 20-year period, because Repo moves slower, is easier to forecast, and is controlled by MPC policy - not daily market liquidity.
  • Market-linked benchmarks (JIBAR → ZARONIA) are more volatile and reset more frequently.

Phoenix Bonds Takeaway

SA Home Loans didn't choose JIBAR because it was better for consumers; they chose it because it matched their wholesale funding model.

Now, with JIBAR ending in 2026, SAHL will transition to ZARONIA - but the core principle remains:

✔ Their cost of funds is market-driven,

✔ Their pricing benchmark follows that market

✔ While the banks continue to price off Repo

For homebuyers comparing options, understanding the benchmark behind your rate is essential - and at Phoenix Bonds, we help you compare all lenders fairly, transparently and strategically.