Lending conditions favour first-time buyers
Category BetterBond Advice
The latest statistics from BetterBond, SA's biggest bond originator*, show that the average size of home loan being approved has increased by 5,7% from R849 000 to R897 000 in the past 12 months.
The originator's approval rate has also increased, from 73% in the previous year to almost 80%, while the percentage of loan applications converted to formal grants has increased from 59% to 63%.
This clearly shows, says BetterBond CEO Rudi Botha, that the banks are keen to lend to homebuyers at the moment - provided that these prospective borrowers meet specific credit, employment and deposit criteria.
"Even more encouraging is the fact that the average approved bond size in the first-time buyer sector has increased by almost 7% over the past 12 months to R696 000, while the average home price in this sector has risen only about 6% to R789 000.
"This means that the average deposit required in this sector has dropped to just 11,5% of the purchase price, making it much easier for young buyers who are typically short of cash to get into the property market."
In line with this, he says, the percentage of home loan applications received from first-time buyers has increased over the past 12 months to almost 48%, and the percentage of home loans being granted in the R500 000 to R1m category is now once again above 40% - "which bodes well for the real estate industry in the coming year because growth is dependent on new home owners continuing to enter the market in substantial numbers".
*BetterBond is our preferred mortgage originator. Its statistics represent 25% of all residential bonds being registered in the Deeds Office and are thus a reliable indicator of the state of South Africa's residential property market.
Author: BetterBond
