Home loan approval rate rises

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The September figures also show a 30 per cent year-on-year increase in the value of home loan approvals achieved, to R1.7-bn a month, says CEO Shaun Rademeyer.

“This is partly a function of the increase in the average home price, which our figures show has risen 9.8 per cent in the year to end in 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.”

Rademeyer adds that it is worth noting that although the initial decline rate dropped in September, more than half of the home loan approvals BetterBond 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 clients’ own banks and then approved by a different bank has risen from 13 per cent to 15 per cent in the past 12 months,” he says.

Meanwhile, the statistics show a 13 per cent 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 per cent in the size of the deposit required.

The average purchase price paid by first-time buyers rose 5.1 per cent year-on-year to R658 516, while the average approved bond size for such buyers rose 6.7 per cent.

However, the size of the average deposit required by first-time buyers rose 11.5 per cent, so it was fortunate that the percentage of loans granted for 100 per cent of the purchase price increased year-on-year from 33 per cent to 38 per cent.

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