Recovery in first-time buyer interest

Sentiment in the residential property market continues to improve and drive up the demand for homeownership, even in the face of rising living expenses and slow economic growth that is keeping the lid on salary and wage increases.  

This is according to Shaun Rademeyer, CEO of BetterBond Homeloans, who says the clearest indication of growing consumer confidence in the market now is the steady increase in the percentage of home loan applications coming from first-time home buyers. 

Such buyers, he says, are usually the first to ‘opt out’ of the market when buying conditions become unfavourable, by staying on with their parents or continuing to rent, but their statistics show that first-time buyer interest has recovered strongly since March, thanks largely to a drop in the deposit requirements for first-time buyers and an increase in the percentage of loans being granted for 100 percent of the property buying price. 

He says affordability has also been increased by the fact that the average home price for first-time buyers has shown little movement in the past 12 months. 

The BetterBond group statistics, which cover 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 South Africa, show that applications from first-time buyers accounted for 44 percent of the total in the three months to end-August, compared to 37 percent in the previous three months. 

They also show that the percentage of 100 percent home loans approved rose to 36.2 percent in August compared to 30.4 percent of the total in August 2012, and that the average percentage of the home buying price required as a deposit by first-time buyers who do not secure 100 percent home loans now stands at 8.8 percent, compared to 13 percent a year ago.

Meanwhile, BetterBond continues to achieve approval for close to three out of every four applications it receives (73 percent), thanks to its indepth knowledge of the process of applying for a bond coupled with the ability to submit to other banks should the applicant’s own bank not provide the best deal, says Rademeyer.  

He says the statistics show that over the past year, 55 percent of applications only succeeded on submission to a second or third lender, so prospective borrowers really do have a much better chance of obtaining a home loan when they apply through them than if they try to organise things themselves. 

In addition, he says the average approved bond amount achieved by BetterBond is now 8.4 percent higher than it was a year ago at R788 018, which is also its highest level in two years. 

www.property24.com

23 Sep 2013