First-time buyers back in force

First-time buyers back in force

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

That’s the word from Shaun Rademeyer, CEO of SA’s biggest mortgage originator 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 are usually the first to ‘opt out’ of the market when purchase conditions become unfavourable – by staying on with their parents or continuing to rent – but our statistics show that first-time buyer interest has recovered strongly since March, thanks largely to a drop in the deposit requirements for such buyers and an increase in the percentage of loans being granted for 100% of the property purchase price. 

Affordability has also been increased, he notes, by the fact that the average home price for first-time buyers has also shown little movement in the past 12 months. (See table).

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 SA, show that applications from first-time buyers accounted for 44% of the total in the three months to end-August, compared to 37% in the previous three months.

They also show that the percentage of 100% home loans approved rose to 36,2% in August compared to 30,4% of the total in August 2012, and that the average percentage of the home purchase price required as a deposit by first-time buyers who do not secure 100% home loans now stands at 8,8% – compared to 13% a year ago.

Meanwhile, BetterBond continues to achieve approval for close to three out of every four applications it receives (73%), thanks to its in-depth 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.

“Indeed,” says Rademeyer, “the statistics show that over the past year, 55% 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 us than if they try to organise things themselves.

“In addition, the average approved bond amount achieved by BetterBond is now 8,4% higher than it was a year ago at R788 018 – which is also its highest level in two years.”


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