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Home loan approval rates on the increase


The latest statistics from ooba indicate that although house price growth has slowed, lower prices and easier access to credit is benefiting buyers.
Third quarter statistics released by ooba, one of South Africa’s leading home loan originator, show that year-on-year from the third quarter last year to the third quarter this year, the growth in the Average Purchase Price effectively remained static with a 0,1% increase. This continues the trend of negative real price growth (growth less inflation) in the residential property market.
The Average Purchase Price recorded in the third quarter last year was R1 192 868 against R1 193 601 this year.
Rhys Dyer, Chief Executive Officer of ooba in press release stated that: “The slowing in property price growth is a symptom of the slowdown in property demand due to economic constraints, socio-political issues and apprehension around the eventual terms of a National Land Reform Act. The positive news about slowing property price growth is that property is more affordable for buyers, especially first time buyers.
He added that cheaper property prices, coupled with easier access to credit with lower deposit requirements from the banks, favour buyers.
Banks are competing with each other by making loans more accessible and affordable, which signals their confidence in how consumers are managing their debt. This is illustrated in the significant increase of 4.6% in ooba’s approval ratio from 73,9% last year to 78,5% this year. At the same time, the average approved bond size increased by 5% year-on-year and the average deposit as a percentage of purchase price showed a significant decrease of 24% year-on-year.
Dyer welcomed the banks positive lending sentiment illustrated by the lower deposit requirement. “ooba is seeing an increasing trend of first-time buyers entering the property market who do not have access to a deposit. Our statistics in the third quarter this year show a growth of 7% in first-time buyers applying for finance with 100% bond applications increasing by 9%.”
Buyers are also benefiting from the increasingly competitive interest rates from banks which are making home loans more affordable. ooba’s statistics for this year’s third quarter show that the average interest rate is 15 basis points cheaper year-on-year. The average rate that ooba achieved for its buyers in the same period was 0,16% above prime compared to 0,31% above prime last year.