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First-time buyers holding on to their dreams

Fuel prices have just risen to record levels, the cost of food is set to jump and utility charges are already sky high, so it’s getting tougher by the day for young people to buy their first home.
 
“And yet,first-time buyers still accounted for almost half (48%) of all the home loan applications we received in the past 12 months,” says Shaun Rademeyer, CEO of BetterBond Home Loans, which accounts for more than 25% of all residential mortgage bonds being registered in the Deeds Office and is SA’s leading mortgage origination group.
 
“This shows just how important home ownership still is to young South Africans, even though it often takes them a few more years to achieve than it took their parents, with the average age of first-time buyers now being 34.”
 
According to BetterBond’s latest statistics, the average home purchase price paid by first-time buyers rose 7,9% in the 12 months to end-March to reach R630 000, but lenders made things somewhat easier for them by dropping the average percentage of purchase price required as a deposit from 12% to 10,6%.
 
By contrast, Rademeyer notes, the figures show that the overall average purchase price rose 11,7% year-on-year to R890 000, and the overall average deposit required declined only marginally to 18,5% of the purchase price.
 
“Most buyers have thus had to put a significantly larger amount of cash into their home purchases in the past year and, especially in the past two months since the increase in the prime interest rate, the effect of this is starting to become evident in a slower rate of growth in the number of bond applications received each month.”
 
However, he says, the March statistics still show substantial year-on-year increases in both the number and value of home loan approvals, as well as a 13% year-on-year increase in BetterBond’s home loan approval rate to 77,2% of all applications received.
 
“We secured almost 52 000 home loan approvals with a total value of R38,1bn in the 12 months to end-March, (compared to 49 000 approvals valued at R35bn in the previous 12 months) and almost half of those approvals were on applications that we were able to rescue after they were initially declined.
 
“This highlights the fact that we are able to offer homebuyers a significantly better chance of having their home loans approved by being able to motivate applications and submit them to multiple lenders.
 
“At the same time, however, it is encouraging to see that the banks’ initial decline ratio did show a year-on-year decline of 21% at end-March, reflecting their greater willingness to lend into the mortgage market in the past 12 months.”


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