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
Characters remaining

    Latest Property News
    • 24 Oct 2016
      Set on 3.5 acres of sprawling gardens this palatial home in the popular Kyalami, Midrand offers the ultimate in luxurious living.
    • 24 Oct 2016
      The suburb of Wynberg was originally farming land belonging to one of the freeburgers that supplied the Dutch East India Company. In 1682 the land was sold to Herman Weeckens, who named the farm De Oude Wijnbergh. With the Cape’s seas growing far rougher during the winter months, ships would lay anchor at Simon’s Baai, which would later be called Simon’s Town. Sailors would then travel via wagon route from Simon’s Town to Cape Town, passing through De Oude Wijnbergh estate.
    • 24 Oct 2016
      Despite our volatile political landscape and the uncertainty of the Rand, investors are still present and keen to buy property. “Investors are seeing the value in placing their money in bricks and mortar in areas with a rising market, which may be seen as a more stable investment than putting money offshore or into other asset classes,” says Harold Kolnik of Jawitz Properties South Peninsula.
    • 24 Oct 2016
      Mixed use developments are no longer an emergent trend in Cape Town; they have become a firmly established feature of the city’s architectural landscape, especially in the CBD where two more developments are already in the planning stage and five new proposals are currently on the drawing board.
    • 22 Oct 2016
      Century 21 South Africa has announced that 2 new sales offices will be opening in and around the Cape Town metro in the next month, one being the City Bowl office and the other being the Blouberg office.
    • 21 Oct 2016
      An exclusive dream home situated in the popular Krugersdorp suburb of Chancliff A H is our Property Pick with its high-end finishes and luxury design aesthetic.
    • 21 Oct 2016
      For many home owners retirement signifies the need to downscale to a smaller apartment or townhouse.
    • 21 Oct 2016
      An ever-increasing population in the Hermanus and surrounding Overberg areas and high demand for quality medical facilities has prompted Annenberg Property Group to develop a multi-disciplinary, state-of-the art medical centre in Hermanus which will be known as Hermanus Medical Village.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us