Report: Average approved bond size increases

The average approved bond size has increased by 4,5% in the past 12 months, while the average house price has increase by just 2,2%, according to the latest statistics from BetterBond.

"These figures correspond to a decline in the average percentage of purchase price being paid as a deposit in the year to end-August, from 22% to 20%," says CEO Shaun Rademeyer, "and the overall picture is one of increasing home affordability."

This is mostly due, he says, to an improvement in disposable incomes, which the BankservAfrica Disposable Salary Index shows as having increased for the fifth consecutive month in July.

"Wage increases, declining inflation and a small interest rate decrease have all played a part in this growth, which simply means that many prospective homebuyers now have more of their take-home pay available to put towards a monthly bond repayment.

"This is excellent news for the real estate industry, because it makes the banks more likely to approve home loan applications - and to lend a bigger proportion of the home purchase price. And taken together with the drastic slowdown in house price growth over the past 12 months from 9,9% to just 2,2%, this definitely opens the door to more successful home sales."

However, Rademeyer says, neither buyers nor agents should take this to mean that the banks are likely to relax their strict credit qualification criteria any time soon. "The economy is in a fragile state and there is a higher risk that borrowers could suddenly become unemployed, so caution prevails, and around 25% of home loan applications submitted are still being declined outright due to credit record problems.

BetterBond statistics show that over the past 12 months the average property price has been R1,1m. The average age of these buyers was 37, and at an interest rate of 10,25%, the average monthly repayment on their loans is R8631.

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