select
|

More home loans granted as home buyers forge ahead

Consumers continue to demonstrate confidence in the residential property market, despite mounting affordability constraints.

That's the word from Shaun Rademeyer, CEO of SA's biggest mortgage originator, BetterLife Home Loans, who notes: "Our latest statistics show that the number of home loan applications being submitted by prospective homebuyers has increased by 4% in the past 12 months, in line with the continued increase in housing demand."

In addition, he says, there has been a sharp decline in the number of applications being declined by the banks, with the net result being an increase of almost 2% in the number of home loans approved in the 12 months to end-June.

"This confirms that there is not only a bigger number of prospective buyers in the market, but also a bigger number who are financially qualified to buy - which is quite remarkable given the food, tax, transport and utility cost increases that have impacted many household budgets over the past year."

Further analysis, Rademeyer says, shows that repeat buyers were in the majority over the past 12 months, accounting for 53% of home loan applications and 67% of home loan approvals. "The fact that these buyers often have equity in an existing property that they can use as a deposit gives them the edge in obtaining bond approval, and many who are 55 and over are now also downsizing, which means they usually also need smaller loans.

"Still, the fact that the majority continue to re-invest their equity in property rather than buy other assets is, we think, a strong vote of confidence in the real estate market that we hope will not be undermined by a hasty interest rate increase after the meeting of the Monetary Policy Committee later this month."

He says that the longer the Reserve Bank is able to hold interest rates steady, as the Federal Reserve is still doing in the US, the better it will be for prospective first-time buyers, too. "In general, such buyers feel the effects of cost-of-living increases to a much greater extent than repeat buyers, and with stretched budgets they are currently having a tough time saving up the cash deposits they require to become homeowners."

The BetterLife statistics, which represent 25% of all residential mortgage bonds being registered in the Deeds Office, show that in the 12 months to end-June, the average percentage of home purchase price that first-time buyers were required to pay as a deposit dropped from 8,7% to 7,5%.

"At the same time," says Rademeyer, "the rate at which the average purchase price in this sector of the market grows slowed from 7,5% to 1,4%, so the actual average cash amount required as a deposit declined - and this easing, we believe, is what has enabled so many first-time buyers to stay in the market thus far. A rate increase at this stage could knock many of them out by preventing them from being able to qualify for home loans."

Meanwhile, he says, home sellers need to bear in mind that the growing trend towards downsizing among repeat buyers has also caused the rate of price growth in this sector of the market to slow down. "Our stats show that in the past 12 months, the average home price has grown only 4%, compared to almost 11% in the previous 12 months. Consequently, sellers hoping for quick sales may want to start moderating their price expectations to some degree."




  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
    • 22 Nov 2017
      While sales have noticeably slowed in most sectors in most Cape town suburbs, the security estate sector in Constantiaberg has bucked the trend by remaining buoyant, with sales by August this year already surpassing total sales in 2016.
    • 22 Nov 2017
      The end of the year is fast approaching, and so are all the travellers, tourists and holidaymakers. For those who live near or own a property in a holiday-hotspot, the festive season also brings with it an abundance of short-term rental opportunities. Its a great way for property owners to make a few extra rand for their own holidays or to put towards their savings.
    • 21 Nov 2017
      The buying process is over, and the moving truck has delivered your household goods to your new property. Now it’s time to unpack and turn your new house into a home.
    • 21 Nov 2017
      When an offer to purchase a property is signed by both buyer and seller, this constitutes a binding agreement or “Deed of Sale” between the two parties. However, in most cases the “standard contract” might not be enough to cover all the specifics pertaining to the sale. The agreement may require some additions or alterations to clauses, which needs an expert hand in the drafting of such
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK