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25-30 year old buyers have greatest need for 100% bonds 

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Buyers paying between R362,873 and R664,093 are most highly dependent on receiving 100% bonds to be able to afford their new home purchases. In fact, more than two thirds (62.28%) of loans in Q4 2016 in this purchasing price band received 100% and higher bonds.

This is according to FNB’s John Loos, household and residential sector strategist, who broke down average transaction values into five “quintiles” to study which showed the highest and which the lowest dependence on 100% home loans.

“The average transaction values, as at Q4 2016, per quintile were R2,465m in the case of Quintile 1, R1,075m Quintile 2, R664,093 in Quintile 3, R362,873 in Quintile 4 and R108,498 in Quintile 5,” he said, noting that lower price quintiles have a higher dependence on 100% loans. In fact, Quintile 5’s total 100% and higher bonds approved in Q4 2016 was 56.56%.

“At the other end of the spectrum, Quintile 1, the wealthiest/highest-price quintile has a significantly lower average loan to purchase price (LTP) level, with a mere 23.1% of its loans in the 100% to 104% LTP range, and 1.8% in the 105% to 109% LTP range (a total of 24.9%),” said Loos. “Lower income/price quintiles thus have the higher dependence on high LTP ratio bonds.

“It makes sense, too, that on an age basis one finds a higher dependence on higher LTPs in the more financially constrained younger generations of home buyers.”

Average LTP ratios by age

92.4% – 18 to 25 year olds

92.8% – 25 to 30 year olds

91.2% – 30 to 35 year olds

89.2% – 35 to 40 year olds

74.9% – 55+ age group

Average bond by age

R680,293 – 18 to 25 year olds

R828,530 – 25 to 30 year olds

R1,103m – 40 to 45 year olds



David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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