select
|

Great demand for 100% home loans, but banks resist

Roughly 20% of all bond applicants in South Africa require 100% bonds today - but the rejection rate on this type of application is always a great deal higher than the average.

Some 85% of those applying for 100% bonds tend to buy in the R500,000 to R750,000 price bracket, says Mike van Alphen, National Manager of the Rawson Property Group's bond origination division, Rawson Finance. Those hoping to buy above R750,000 are often upgrading and can put down 10 or 15% deposits as a result of the sale of their current home.

'The banks are sometimes accused of being too harsh in their assessments of 100% bond applicants. However, in my experience this is not so - they are committed to helping in this sector but they have to work to the rules and standards set by the National Credit Act and there is no getting away from this.'
 
Despite on-going publicity in the media on this subject, says van Alphen, the vast majority of bond applicants do not check their credit records before applying for a bond, nor do they make any attempt to save for a deposit.

'In these circumstances a good originator can help: one free credit check is allowed for every South African resident per annum and if further checks are needed the originator can arrange these. Furthermore, an experienced originator can advise the applicant on how to manage his or her expenses so as to build up a nest egg for a deposit. This may be a long term process and saving may take a year or two, but many good bond originators have set applicants on the right path in this respect.'
 
Another common mistake, says van Alphen, is for applicants to apply for a bond that their incomes do not justify. Here, too, he says, a bond originator can often help the applicant adjust his sights in the way prescribed by the banks.

Regular calls from the public for 'safety net guarantees' to the banks to increase bond application 'hit rates', says van Alphen, are misguided. It is, he believes, the public themselves who must learn to be more responsible. 
 
'We all recognize that an increase in 100% bond approvals is exactly what is needed to stimulate the housing sector and allay social discontent. However, this must not be done by ignoring the provisions of the National Credit Act, which, applied at exactly the right time, has succeeded in limiting reckless spending and has, to a large extent, protected potential home buyers from accumulating a large monthly debt commitment that they simply cannot afford,' says van Alphen.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
        
    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