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Bond originator ooba see record home loan growth in approvals

House prices continued to show a moderate year-on-year growth of 3.8% to R854,740 in October, according to the latest statistics from ooba, South Africa’s biggest bond originator.


For the month of October, ooba reported record high approvals, up 47% on October 2011. This boosted ooba's performance for October to 299% higher than ooba’s historical lowest month in 2009.

“The house price numbers reinforce the recent trend of continued subdued average price growth,” says Saul Geffen, ooba CEO. “However, ooba’s market experience paints a different picture with aggressive growth experienced in both applications received and in approved home loans.”


House prices for first-time buyers grew marginally to R649,424, 3.8% up year on year. The percentage of first time buyers among ooba’s total applications dropped 1.5% from September’s record high to 52.4%.


“The changing mix of home loan applicants is having a suppressing effect on the growth in average home prices” Geffen says. “Given the consistent record levels of first-time home buyers of over 50% of all applications, the changed applicant mix is continuing to favour the purchase of smaller more affordable properties, which may be suppressing the overall house price trend. This is demonstrated by the higher median house price growth recorded, which has averaged 6.28% growth over the past three months.”


The average home loan deposit showed a decrease to 13.5% of the purchase price.

The average approved bond size increased 11.8% to R739,340 in October this year from R661,377 in October 2011. The approved bond size also showed a 2.6% increase month on month.


Although the initial decline ratio increased 4.4% to 48.8% in October, the percentage of applications that are declined by one bank but approved by another improved by 2.9% to 24.9%.

ooba’s effective approval rate which is the overall percentage of loans approved once ooba has shopped around to all banks was 63.4% in October, and ooba’s trailing approval rate, which takes into account loans approved after month-end is currently 70.7%.


“Credit conditions remain favourable for buyers, and ooba is currently obtaining approval for seven out of every 10 home loan applications it receives,” says Geffen. However, he cautions buyers that deposit requirements are likely to increase. “The banks’ appetite for 100% home loans is diminishing.”

Full oobarometer analysis:

Indicator

Oct

2012

Oct

2011

Change yr on yr

(Oct 12 vs Oct 11)

Sep

2012

Change month

on month

(Oct 12 to Sep 12)

Avg purchase price

854,740

823,476

3.8%

876,717

-2.5%

Avg purchase price

of  first time buyer

649,424

625,483

3.8%

661,159

-1.8%

Avg approved bond size

739,340

661,377

11.8%

720,545

2.6%

Avg deposit (as % of purchase price)

13.5%

(R115,400)

19.7%

(R162,099)

-31.5%

17.8%

(R156,172)

-24.2%

Avg age of applicant

36

36

No change

36

No change

Avg initial decline ratio

(first bank decline)

48.8%

44.4%

4.4%

48.0%

0.8%

Ratio of applications declined by one lender but approved by another

24.9%

22.0%

2.9%

27.4%

-2.5%

Effective approval ratio

63.4%

65.4%

-2.0%

65.2%

-1.8%




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