In the financial year ending in February, the average price of homes on which new bonds were approved rose by 6.3 percent to just over R1 million, according to the latest statistics from BetterLife Home Loans.
In the financial year ending in February, the average price of homes on which new bonds were approved rose by 6.3 percent to just over R1 million, according to the latest statistics from BetterLife Home Loans.
The company's chief executive officer, Shaun Rademeyer said the monthly household income required to qualify for the average loan has risen less than 1 percent in the past 12 months, despite the 6.3 percent rise in house prices, largely because so many prospective borrowers have been able to put down bigger deposits.
“What is more, greater financial awareness and discipline as regards personal debt management and savings has facilitated sustained demand in the residential property sector over the past 12 months – and in the number of new home loan applications – even though there have been three interest rate increases in that time.
These figures also show that over the same period, the average approved bond size was R811 000, and that 52 percent of borrowers in the past 12 months were able to pay a deposit of one-fifth of the purchase price, or more, when applying for their home loans.
“This is a far cry from the days when 100 percent or no-deposit loans were the norm,” says Rademeyer, “and it is very much in line with our on-the-ground experience, which is that South African consumers have become much more informed about their finances in general, and are putting a lot more financial preparation into becoming home owners than they did a few years ago.
“Many of those coming into the market as home buyers now have in fact been saving carefully for two to three years to accumulate a sizeable deposit, because they are more aware of the benefits of doing so when it comes to qualifying for a loan, and also keeping monthly bond repayments down in the face of rising interest rates.”
This bodes well for the future of the market as buyers move up the property ladder, says Rademeyers, as does the fact that the banks are still keen on new home loan business.
