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Bond application declines up, requests for 100% loans down

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Almost half of all mortgage applications were declined in Q3 2016 compared with the same period last year. This is according to quarterly property statistics released by bond originator, ooba, which explains this is as a result of buyer’s lack of affordability.

“There has been a worsening in year-on-year average bank decline rates, with average bank decline rates increasing from 43.2% in Q3 2015 to 47.9% in Q3 2016,” said Rhys Dyer, CEO of ooba. “While there has been some limited tightening from banks, a significant factor in the increased decline rates is the worsening affordability of home buyers.”

Fewer applications for 100% bonds were also received in Q3 2016 compared to last year, with 44% of applicants requesting the full loan – down from 51% in Q3 2015. Dyer said this was due to buyers being aware of the importance of a deposit to secure a home loan.

“Although the average purchase price increased by 5.9% in Q3 2016 compared to Q3 2015, the rate of growth is slowing, with Q3 property price growth reflecting a 3.3% decline over Q2,” he said. “When adjusting for inflation, house price growth is struggling to show any real year-on-year growth.”

Other take outs

  • Average purchase price of first-time buyers in Q3: up by 7.2% year-on-year
  • Average deposit to purchase price in Q3 2016: 15.4% of purchase price (relative to 15.9% in Q3 2015)
  • First-time buyers: 53% of all ooba applications in Q3 2016 (unchanged from Q3 2015’s 53%)
  • Black home buyers: 61% of all ooba applications in Q3 2016
  • Self-employed applicants: 10% of all ooba applications in Q3 2016, yet accounted for 17% of the value of applications received
  • Average interest rate: prime plus 0.45% processed by ooba in Q3 2016

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