So says, Rudi Botha, CEO of leading mortgage originator Betterbond, who believes that while there may be a little more competition among the banks for certain clients, the lending volumes prevailing in 2011 will be maintained for most of this year.
Currently, he notes, new mortgage lending totals about R7,5bn a month, and further advances about 2,5bn a month – with about 25% of these loans being obtained through Betterbond.
In addition, says Botha, consumers should not expect too much in the way of interest rate concessions in 2012.
“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.
“However, the good news in this regard is that most lenders are currently credit-scoring potential borrowers to allow for a one or two percentage point increase in interest rates in future, which means that those who are approved for loans should have the financial resilience to cope with such an increase without defaulting and running the risk of losing their homes.”
What is more, he notes, the requirement for most homebuyers to pay a deposit of at least 10% offers protection against the possibility of negative equity for both individual borrowers and the real estate market in general. “And we believe this is prudent in the face of the ongoing turmoil in the world’s financial markets.”
On the other hand, he says, Betterbond is not expecting any increase in interest rates until perhaps the end of 2012, “and this, together with even modest wage and salary increases, will further increase the affordability of home ownership for many people”.
As for the real estate industry itself, Botha says economies of scale and cost savings on shared services will be some of the main drivers for further consolidation among real estate agencies.