|Straddling the top of homebuyer lists this new year should be their comfort on long-term home loan repayments, says Rudi Botha, CEO of BetterBond. |
Botha believes that while it’s worth taking a measured risk in a booming property market the converse is even more applicable in the current tightening market. Not that he foresees any untoward market anomalies occurring, but urges buyers to be mindful of stabilising property prices and compressed affordability.
Interviewed in Cape Town during the announcement of the company’s Western Cape regional office posting R1-billion in home loan grants in November, Botha recommends buyers should exercise sound financial prudence in their repayment abilities. He also cautions, unless for a specific purpose, against being lured into a 30-year homeloan repayment period, which is recently being promoted.
“Unless the buyer has some master plan to redeem the bond long before the duration of that period they should do their sums and work out the added costs over the extended period before committing themselves to repayments over two third of their working life.”
Similar caution, in terms of ability to meet monthly repayments should also be applied to the shorter repayment period of 25 years especially among young couples likely to start of expand their families. Although barely a week since the Monetary Policy Committee decided to hold interest rates at current levels Botha says the decision has definitely introduced a flush of confidence between both borrower and lender.
Banks appeared to be more positive in their lending patterns even with self-employed people, especially if they were existing clients.
Turning to the Western Cape market, Botha says the market remained strong in the lower and middle segments, particularly in the top end of the middle market where greater realisation by sellers in their properties true worth was increasingly evident. This market was under strong focus from up-graders and was still generally affordable to middle management.
The region’s new monthly record of R1 billion in grants in November had represented a coming of age for the Western Cape office within the company and within the mortgage origination industry. When launched five years ago the office had recorded monthly grants of R8 million, this had grown to R100 million in May 2002 and now surged to the R1bn mark representing a commanding share of the Western Cape market by BetterBond.
The growth had come from the company’s commitment to service all price markets, the forging of ties with the more active developer and stringent quality control. Testament to the latter’s strict monitoring was a string of awards for the region’s quality of submissions.
Botha expects the Western Cape’s current steady turnover to remain constant well into next year underpinned to some degree by greater realisation on asking prices and a more temperate approach by both seller and buyer toward negotiation. One of the most pleasing aspects of the year’s end for him was that of interest rates remaining unchanged.
“If the MPC had increased the rate it would have impacted negatively on confidence and if reduced it would have triggered a spending spree at Christmas with equally negative consequences. By maintaining the status quo the perception is further enhanced of a very stable and predicted market, which lays further foundation to the property market.”