select
|

More bonds being granted, but banks still strict

The average home price showed a year-on-year gain of 9% in April to R893 000, according to the latest statistics from BetterBond, South Africa’s biggest mortgage originator.
 
“This reflects the continued upward trend of prices over the past year, despite monthly fluctuations,” says BetterBond CEO Rudi Botha, who notes that this growth has largely been driven by an increase in demand, as evidenced by the steady climb in the number of home loan applications being submitted each month. This number is now 9,6% higher, on average, than it was 12 months ago.
 
“In addition, the monthly home loan approval rate now stands at 69% of those applications, compared with 61% 12 months ago, and what this means, given the higher number of applications, is that the banks are approving more bonds than they were at this time last year,” he says.
 
“Indeed, this tallies with the latest available Reserve Bank statistics, which show a 1,6% year-on-year growth in mortgage advances in February, mostly as a result of higher demand in the residential property sector.”
 
However, 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, also show that the pattern of lending has remained much the same since August last year, with 30% to 35% of loans granted each month being for the full home purchase price (100% loans) and the remainder being spread fairly consistently over the other loan-to-value categories. (See Graph 1).
 
“This indicates,” says Botha, “that while banks are now slowly expanding their home loan ‘books’ again, there has been no significant change in their lending criteria since the last interest rate drop in July 2012. The great majority of homebuyers are required to pay a deposit in order to secure a home loan, with the average deposit being 17% of purchase price - the same as it was 12 months ago.”
 
The statistics also show a consistent pattern of higher percentage deposits being required for higher priced homes. For example, the average deposit required for homes costing between R500 000 and R1m, which is where the bulk of purchasing activity (42%) is taking place, has remained within a narrow range of 12% to14,5% of purchase price for the past 12 months.
 
By contrast, buyers in the R250 000 to R500 000 price category are usually only required to pay a deposit of around 7,5%, while those purchasing for more than R2,5m generally need to find around 35% of the price in cash.(See Graph 2).
 
Botha also says that no major changes to this scenario are expected at least until the end of this year, barring any sudden change in interest rates. “Despite the current low rates, the increase in demand for property – and in home loan lending – is likely to remain muted in the coming months as consumers struggle to cope with significant cost-of-living increases and the banks worry about very high household debt levels that limit the ability of borrowers to make bond repayments.”




  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
        
    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