Home deposit requirements rising again

The banks are granting more 100% bonds – but they have also raised the deposit requirements once more for those homebuyers that do not qualify for 100% loans.

This is evident in the latest statistics from BetterBond, SA’s biggest mortgage originator, which represent 25% of all residential mortgage bonds being registered in the Deeds Office and include applications to, and bond grants from, all the major lending banks in SA.

These figures show that the percentage of 100% bonds being granted rose to 41% in June, compared with 37% in May - but that the average percentage of purchase price that non-100% borrowers were required to pay as a deposit in order to secure a home loan rose in the same month from 17,1% to 19,1%.

“This coincided with an across-the-board increase in the prices being paid by homebuyers,” says BetterBond CEO Rudi Botha, “and supports our previous observations that there is a deposit ‘sliding scale’ – that is, the higher the home price, the higher the deposit percentage is likely to be.” (See graph.)

In June, he notes, the average home price paid was R857 000, well up from the R838 000 recorded in May and even the R843 000 achieved in April.
This increase combined with the higher percentage deposit required means that the average buyer in June who did not secure a 100% loan was required to pay a deposit of some R164 000 – compared to about R143 000 the month before.

However, buyers in certain sectors of the market did not need that much cash. The average home price paid by first time buyers in June was R615 000 (compared to R597 000 in May), and the average percentage of purchase price required as a deposit by such buyers who did not secure 100% loans rose to 11,5%, from 10,3% in May. Thus the average first time buyer only needed about R71 000 as a deposit.

“What is more,” Botha says, “most of the 100% bonds that are being granted currently are going to buyers at the lower end of the price scale, which is good news for the real estate industry as it is encouraging and helping more people to gain entry to the property market and steadily expanding the size of that market. Indeed, first time buyers currently account for 41% of the total number of loan applications and about 36% of all loans granted.”

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