SA bond originators radically outperform the national averages in achieving bond acceptances

Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance, has drawn attention to a prediction from Absa and their chief property analyst, Jacques du Toit, who says that the property market is likely to continue to show relatively subdued levels of market activity, transaction volumes, price growth and demand for mortgage finance this year.

“The Absa report”, said van Alphen, “makes it clear that this will be due to household credit growth remaining firmly in the single digit bracket this year.”

“Absa’s figures”, he said, “also show that year on year growth in private sector mortgage loans was 2,6%, while growth in outstanding mortgage balances was only marginally higher at 2,8% - obviously an unsatisfactory growth rate for an emerging economy.”

The report, says van Alphen, also records that general loans and advances, credit card debt and overdrafts growth rates dropped to 7,7% year-on-year, and, as it always has to be accepted that in tight lending conditions, mortgages will always be held back, it is unlikely that we will see a significant increase in home financing for some time to come.

But, says van Alphen, these rather disheartening figures have to be assessed along with those from the major bond origination organisations, including Rawson Finance, which have all shown significant growths in turnover in the last year. Rawson Finance, says van Alphen, has seen a 35% increase in turnover year-on-year. How can this be explained in view of the uninspiring national figures for bond acceptances?

According to van Alphen, demand for home ownership, especially below the R1 million mark, is at the moment very strong indeed, possibly at a higher level than ever seen before in South Africa.  However, he says, a very high percentage of potential buyers have been having their bond acceptances rejected because they were putting in applications without fully understanding the criteria on which banks work. 

“In situations of this kind”, said van Alphen, “bond originators can perform a valuable role in holding back the application until the factors which might disqualify it, with their help, are rectified.  As a result, companies like Rawson Finance, have been achieving a 65 to 70% acceptance rate – and the good news is that in the current situation, although roughly half the applicants are ruled out because of impaired records, 52% of credit active South Africans are assessed by the credit bureaux as being acceptable for a bond.”

This, says van Alphen, is more than sufficient to keep the residential property market alive, albeit not booming and gives considerable hope that, with inflation reined in below 6% in 2015 and 2016 (as it is now predicted it will be), we can look forward to improved prices in house sale volumes and values from now on.  For the foreseeable future these will, van Alphen agrees with Absa, be below 10% but, he predicts, in 2015 and 2016, house prices could once more remain steady in the double digits bracket. 

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 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.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us