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Property market is shifting towards the middle

More than 70% of the home loans currently being granted are for amounts under R1m, according to the latest statistics from 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.
 
Another 26% of the loans being granted are in the R1m to R2,5m range, leaving only about 3% in the over R2,5m category, says company CEO Shaun Rademeyer.
 
“Indeed, despite all the attention recently given to the increasing sales of multimillion-rand trophy homes, the real backbone of the housing market at the moment is the lower end, where every month sees many thousands of people making offers to purchase and applying for home loans.
 
“This is reflected in our figures in the fact that 48% of applications are still coming from first-time buyers, whose average home purchase price is R630 000, and who are paying an average of R67 000 as a deposit.”
 
However, he says, there have been some quite noticeable shifts in lending patterns over the past 12 months, in line with a gradual upward shift in property prices, and with an increase in purchasing in the middle-income sector, which has more repeat buyers with equity in existing homes that they can leverage as deposits.
 
“For example, the proportion of bonds grated in the R250 000 to R500 000 price range has dropped by more than 16% in the past 12 months, while the proportion being granted in the R1,5m to R2m range has risen 33%.
 
Meanwhile, Rademeyer says, it is interesting to note that despite the banks’ increased appetite for mortgage lending in the past 12 months, the percentage of loans being grated for 100% of the purchase price has declined, with the result that 61% of all borrowers are now required to pay a deposit.
 
“And according to our figures, the average percentage of purchase price required as a deposit has been a not-insignificant 18,5% over the past 12 months – although it does vary greatly depending on the home price category and, of course, on the individual borrower’s credit profile.
 
“This trend is tilting things further in favour of middle-sector buyers and we expect it to gain momentum as interest rates and household expenses continue to rise over the next 12 months.”


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