Lending to home buyers still on the rise

The average size of bond granted in SA has grown 7,7% in the past 12 months to R934 000, according to BetterBond, the country's biggest bond originator.

The company's latest statistics* also show that there has been an 11% increase in the total value of bonds approved during the 12 months to end-May.

In addition, there has been a 7,3% increase in the total value of bonds formally granted, while the average percentage of purchase price being paid as a deposit has dropped during this period from 21% to 19,5%. 

This reflects the banks' current eagerness to increase lending to home buyers and is echoed in the latest figures from the Reserve Bank, which show a 3,3% increase in the value of outstanding household mortgages in the 12 months to end-April, to a national total of R932bn.

The BetterBond statistics also show that the average size of bonds granted to first-time buyers has risen 11,2% in the past 12 months to R739 000, while the average percentage of purchase price required as a deposit has dropped slightly from 12 % to 11%. 

At the same time, however, high demand and the slow pace of supply in this sector of the market has driven the average home price up by 11%, which means that the actual amount of cash required as a deposit has gone up by almost 6%, and we have seen the percentage of home loan applications coming from first-time buyers shrink from 47,5% to 46% as a result.

It is also worth noting that the average home price currently being paid by first-time buyers is, at R831 000, getting close now to the R900 000 mark at which transfer duty becomes payable. If it crosses that threshold, such buyers will have to save even more cash before they are able to enter the market.

Currently, the average deposit amount being paid by home buyers aged 20 to 30 is R88 000, and the average being paid by those aged 30 to 40 is R150 000. The average age of first-time buyers is 34. 

Meanwhile, BetterBond notes, although it continues to obtain approval now for more than 80% of the applications it submits to the banks, more than half (51%) of those approvals are for applications that have been "rescued" after they have initially been declined by at least one lender. 

This underscores the value of applying for your home loan through a reputable originator like BetterBond, which will not only give you a much better chance of being approved for a loan, but by submitting your application to all the major banks will also ensure that you get a loan at the lowest available interest rate.
    
*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.