select
|

Banks tighten their purse strings again

A sharp drop in the number of 100% home loans granted in August compared with June and July indicates that the banks, concerned about the still-high levels of household debt, are once more tightening up on credit qualification requirements for prospective homebuyers.

So says Rudi Botha, CEO of BetterBond, which as SA’s biggest mortgage originator assists thousands of buyers a month to obtain home loans. “Our latest statistics show that the percentage of home loans granted for 100% of the property purchase price fell to 35% in August from 39% in July, and 41% in June.

“Obviously, the banks are worried by the fact that the average household debt to income ratio is still stuck at around 75% at a time when consumers are facing rising energy, water, transport, food, education and medical costs that will undoubtedly eat into whatever disposable income they have left, and limit their ability to make bond repayments.

“Consequently, they are looking to lower those repayments, and their own risk, by insisting that a greater percentage of home loan applicants pay a deposit.”

What is more, he says, the average deposit required by those who did not obtain 100% bonds rose to 17,4% of the property purchase price in August, from 16,5% in July. “And for first-time buyers, the average deposit payable rose to 11,6% of purchase price from 9% in July, even though the average first-time purchase price dropped from R641 000 to R613 000.”

There is, however, some positive news in the BetterBond statistics, 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.

“For a start,” says Botha, “the total value of new bonds being granted monthly through BetterBond has been holding steady for some time at around R2,4bn a month, indicating continued housing demand and growing stability in the market.

“In addition, first-time buyers still accounted for more than 40% of home-loan applications in August, and received 37% of all home loan approvals, which reveals a healthy influx of ‘new blood’ into the market that bodes well for the future. And of course first-time buyers are still receiving the lion’s share of the 100% home loans that are being granted.”

The BetterBond statistics also reveal that the majority of home loans currently being approved (38%) are for purchases in the R500 000 to R1m price category, which corresponds largely with the percentage of loans being granted to first-time buyers. A further 27% of loans are being approved for purchases of more than R1,5m, while 23% are going to those buying in the R1m to R1,5m bracket.      

The figures also show that 40% of loan approvals are currently going to homebuyers aged between 30 and 40, with the next highest percentage (23%) going to buyers in the 20 to 30 age bracket. “This also bodes well for the future,” says Botha, “as it means almost two-thirds of current buyers are young and will provide further market stimulus as they move up the property ladder.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Feb 2018
      RE/MAX Property Associates’ Table View Office, which services property buyers and sellers along the Table Bay coastline and surrounds, has recently sold a home in Woodbridge Island for R11 million – the highest price paid for any home in the sought-after security complex.
    • 23 Feb 2018
      Choosing to invest in an overseas property can be daunting. But as more and more investors recognise the value of a diversified portfolio that includes property outside of their own country of residence, international property investment is growing in popularity.
    • 23 Feb 2018
      The positive change in South Africa’s political landscape is paving the way for an upswing in the local property market.
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
        
    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