SA’s home loan approval rate increases

According to the latest statistics from BetterBond Home Loans, South Africa’s biggest mortgage origination group, its home loan approval rate has topped 80% in the past month, the highest level reached since 2009.

“The September figures also show a 30% year-on-year increase in the value of home loans approvals achieved by BetterBond to R1,7 billion a month,” says Shaun Rademeyer, the CEO of BetterBond Home Loans.

“This is partly a function of the increase in the average home price, which our figures show has risen 9,8% in the year to end-September, but also an indication of the effectiveness of mortgage originators, who not only provide potential borrowers with a comparison of the various borrowing options on offer at any particular time, but will motivate their applications individually and submit them to a number of different banks if necessary.

“It is worth noting that although the initial decline rate dropped in September, more than half of the home loan approvals that we have achieved over the past year have only been achieved on submission of the application to a second or even third lender.

“Also, the percentage of applications turned down by our client’s own banks and then approved by a different bank has risen from 13% to 15% in the past 12 months,” says Rademeyer.

Meanwhile, the statistics show a 13% year-on-year increase in September in the average size of bond approved for those who obtained their home loans through BetterBond

and an average decline of 2,4% in the size of the deposit required.

The average purchase price paid by first-time buyers rose 5,1% year-on-year to R658 516, while the average approved bond size for such buyers rose 6,7%.

However, the size of the average deposit required by first-time buyers rose 11,5%, so it was fortunate that the percentage of loans granted for 100% of the purchase price increased year-on-year from 33% to 38%.

Most 100% home loans are granted to first-time buyers who fall into the “affordable” or “gap market” category.