select
|

Good News about Mortgages

The past few years have been tough for home buyers, estate agents and mortgage originators. The causes for this are interlinked: the international economic climate, the local interest rate and banks’ low risk appetites.  While the global economic situation is far from stable there is some good news on the home front in that the interest rate is likely to remain unchanged for 2012 and, importantly, banks are increasingly approving home loan applications.

It is in this light that the recent announcement from Absa Bank that it wants it mortgage share back is welcomed by estate agents and mortgage originators alike. Home buyers know how difficult it’s been to get their home loan approved – 50 out of every 100 applications are turned down at first reading.
The 50% who’s applications are approved also need to face the fact that “the situation now is quite different from that a few years ago, when borrowers in good standing could with relative ease secure a rate that was one or even two percentage points below prime rate. These days most loans that are approved are at prime (currently 9%) and then in most instances only if the borrower can pay a 10% deposit”, says Rudi Botha, CEO of Betterbond.

The home loan market is big business in South Africa totalling R900bn of which Sifiso Shongwe, managing executive of Absa Home Loans, says Absa currently has an R 221bn share. Shongwe admits that the bank did lose market share due to their low risk threshold, but that the bank plans to conduct 30% more business in 2012 than it did last year.
“It is very good news that Absa wants to capture as much as 30% more business this year.  The home loans market was dominated by Standard Bank last year and the re-entry with Absa at this level is bound to create competition”, believes Jan le Roux, CEO of Leapfrog Property Group.

Le Roux goes on to say that while estate agents have many willing and able buyers, obtaining home loan finance remains the biggest challenge.  More competition between the bigger banks is bound to enhance this position and bodes well for the property market.

According to Absa they’ll increase their market share by improving their services, notably due to the implementation of their Easycheck system with which home loan applicants can find out whether they could qualify for a loan in 60 seconds.

Shongwe revealed that the plan also includes focusing on Absa’s existing clients as the bank already understands their risk profiles and can price for them. Le Roux believes that increasing market share will ultimately come down to winning over applicants from other banks which could mean less stringent requirements – a development that will be welcomed by both buyers and mortgage originators.

Underscoring Absa’s desire to become bigger competition is the fact that housing affordability continues to improve and that now is indeed a good time to buy a home as indicated by Jacques du Toit, Senior Property Analyst at Absa Home Loans.

Jan le Roux believes that this evaluation is on the money; “I fully agree with Mr Jacques du Toit of Absa home loans, it is indeed a good time to buy a home now.

One must not forget that for most South Africans buying and selling homes is not a pastime but the most important investment they will ever make.  They cannot necessarily bide their time according to market fluctuations and must make decisions based on other considerations such as the proximity of schools, transfers, types of accommodation and such like.  Now is a good time to make those decisions and make a medium to long term commitment in owning property.”

This report has been compiled by Leapfrog Property Group


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 16 Sep 2014
      Situated in the popular Featherbrooke Estate, Krugersdorp is our Property Pick of the day is a stunning one in a million, Victorian styled home.
    • 16 Sep 2014
      Home prices in the Overberg town of Caledon have increased by up to 25% since the middle of last year thanks to younger buyers increasingly targeting the town and taking up available stock.
    • 16 Sep 2014
      Millennials all over the world have been much slower to enter the property market than their parents or grandparents were, but that doesn’t mean they don’t want to be homeowners, says Shaun Rademeyer, CEO of BetterBond Home Loans, SA’s leading mortgage origination group.
    • 16 Sep 2014
      Encouragingly, the residential property market is currently in an upward cycle and we are seeing a strong resurgence of investors entering the market, says Carol Reynolds, Pam Golding Properties area principal in Durban, Durban North and La Lucia.
    • 16 Sep 2014
      “There are many different Capital Gains Tax theories and opinions, but actually when this tax is analysed, it is not so daunting or complicated” says Craig Hutchison, CEO of Engel & Völkers Southern Africa.
    • 15 Sep 2014
      For an unbelievable experience of good taste, luxury and country living combined, you have to view this property in Zonnehoewe, Roodepoort.
    • 15 Sep 2014
      A new development aimed at the over-50 retiree has been launched to market in Porterville, located in the Western Cape, about 150km north-east of Cape Town.
    • 15 Sep 2014
      Owners and trustees in sectional schemes regularly enquire whether the body corporate can charge money for the grant of exclusive use rights. Typically, the common property involved will be a parking bay, garden area, courtyard, patio or balcony. Sometimes it will be the roof space above an original ceiling, a basement or an open space below the owner’s section.
        
    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