select
|

Higher incomes needed now to qualify for bonds, says BetterBond

According to the latest statistics from BetterBond Home Loans, SA’s biggest mortgage origination group, home buyers in SA now need to earn a gross monthly income of around R30 000 to buy an average home costing some R952 000.
 
The BetterBond figures also show that 64% of buyers currently have to pay a deposit in order to secure a home loan, and that the average deposit required for a home priced at R952 000 is around R99 000 – or 10,4%.
 
“This puts the average home loan required to buy such a home at R853 000, and the average monthly bond repayment at just over R7400,” says BetterBond CEO Shaun Rademeyer.“Now in the days before the National Credit Act, when the simple rule-of-thumb was that your monthly bond repayment should not exceed 30% of your gross salary, that would have meant that a gross salary of R24 700 was enough.
 
“But in terms of the Act, banks are obliged to try to stop consumers from becoming over-indebted. So when they consider a home loan application they must now also take into account your existing debt commitments and regular monthly expenses and see if there is enough disposable income left over to comfortably cover the monthly bond repayment.
 
“And because of the high household debt levels in this country, and the continually rising cost of food, transport, utilities, healthcare and education, most prospective homebuyers need to have higher earnings now in order to ensure that there will be a big enough amount ‘free and clear’ every month to cover their bond instalment.”
 
Things are a little easier for first-time buyers, says Rademeyer, with the average home price in this sector of the market having risen by just R27 000 in the past 12 months(see table) anddeposit requirements having shrunk considerably to between about 6% and 10%
 
“What is more, about two-thirds of the 100% bonds that are being granted are going to buyers at the affordable end of the market where most buyers tend to be first-timers.”
 
In any case, he notes, the banks’ still-strict lending criteria do not appear to have put much of a damper on the demand for home finance – or in fact on the banks’ willingness to lend to qualifying applicants.
 
The BetterBond statistics show a 3,75% year-on-year increase in November in the number of home loan applications received and, even more significant,  a 14% increase year-on-year in the number of applications formally granted (that is, approved and taken up by the borrowers).
 
The figures also reveal a 10,5% year-on-year drop in November in BetterBond’s initial decline rate (the percentage of applications declined by the first lending institution to which they are submitted) and a15% year-on-year increase in the ratio of applications declined by one bank but approved by at least one other.
 
This took the group’s average approval ratio to 76% in November, which means that it is securing a bond approval for at least three out of every four of its applicants – and the statistics reveal that about 80% of these approvals are taken up by borrowers and converted to formal grants.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 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.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
        
    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