Many home buyers still believe that their best chance of obtaining a home loan is to apply to their own bank – especially if they are long-term customers in good standing.
“But this is not necessarily true,” says Rudi Botha, CEO of BetterBond, SA’s leading mortgage originator. “Our statistics show that while 83% of our clients request that we first submit their home loan applications to their own banks, almost half of these applications (46%) are initially declined – and would have less chance of success if we could not then submit them to other banks for consideration.
“As it is, our ‘rescue rate’ for own-bank applications that have been declined is currently 29%, which means that we are able to help about one client in three who is turned down by their own bank to secure a home loan from another institution.”
The BetterBond statistics also show that its initial approval rate among all home applications rose from 49% to 51% year-on-year in January, with a further 16% being “rescued” each month because BetterBond was able to originate them to other lenders.
“What this means is that almost seven out of 10 potential borrowers who come to us for help in getting a home loan will be successful,” says Botha, “whereas only about five out of 10 who go to their own bank will be successful.”
In addition, he notes, BetterBond has recently signed origination agreements with both Investec and Rand Merchant Bank, which will create even more approval possibilities for its clients, especially at the upper end of the market.
Meanwhile, he says, the steady overall recovery of the residential property market is evident in the rising number of property registrations. “At the height of the market in 2006, approximately 40 000 home sales a month were being registered in the Deeds Office. This plunged to about 14 000a month in 2009 during the global recession, but has steadily risen back up to reach about 22 500 a month, including cash sales
“What is more, the industry-wide bond application approval rate of about 51% is more than double the 24% that was being achieved when the market hit bottom in 2009, so things are definitely looking up.”
*The monthly BetterBond statistics are regarded as an excellent independent gauge of home loans market activity because they 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.
Issued by BetterBond