Don’t let a mixed picture put you off

mixed views on the home marketThere’s “good news and bad news” for prospective homebuyers in this month’s statistics from BetterBond, which is SA’s biggest mortgage originator.

The good news is that the banks are granting more bonds – the figures show that in January, almost two-thirds (63%) of the home loan applications made through BetterBond were approved and taken up by the applicants, compared with only 47% a year ago.

And since the company’s statistics represent a quarter of all residential mortgage bonds being registered in the Deeds Office – and include applications to and bond grants from all the major lending banks in SA – this is a good indication of what is happening across the market.

“There was also more good news for buyers this month,” says BetterBond CEO Rudi Botha, “in the Reserve Bank’s decision to keep interest rates unchanged at their current 40-year lows. This extends the opportunity for homebuyers to qualify for bonds more easily as they are more likely to be able to afford the monthly repayments.”

The not-so-good news is that the number of 100% home loans being granted continues to fall, as banks insist that buyers invest some of their own money in their homes in the form of deposits. The BetterBond statistics show that in January, only 20% of approved bonds were for 100% of the property purchase price, compared with 21% a month previously, and 22% a year ago.

“The average deposit required in January,” notes Botha, “was 18,7% of the purchase price, which was more than the 18,5% required in December but better than the 19,6% required a year ago.

“However, this overall average hides the fact that much lower deposits are required in the lower home price categories – which is more good news, especially for first-time buyers and those downscaling to homes in the R250 000 to R500 000 bracket, where the average deposit requirement at the moment is just 10%.”

This should make it much easier for such buyers to save up the necessary deposit, he says, “and it’s very important that they do so as soon as possible, not only because it will make it easier to obtain a bond but because it could save them a really significant amount over the 20-year span of a bond.

“For a start, property prices have resumed a steady upward trend and the longer buyers wait now, the bigger the bond they are likely to need, and the higher their repayment will be every month. In addition, those who do obtain 100% bonds now sometimes have to pay a premium interest rate above prime, which could add much more than the initial deposit amount to the ultimate cost of their home.

“But buyers need more information about this and other long-term implications of their home financing decisions, and for independent advice on keeping their home acquisition costs down as well as obtaining the most suitable home loan, they should consult our experts – free of charge – as the first step in the buying process.”

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About BetterLife Home Loans

Since 2003 BetterLife Home Loans has been SA’s No.1 Bond Originator, handling the entire home loan application process on your behalf – free of charge! Our aim is still to source the best interest rate for you by submitting your home loan application to all the major banks. There is no easier way to apply for a Bond or Home Loan in South Africa!

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