According to Shaun Rademeyer, CEO of BetterBond, the current market is looking promising for first-time buyers.
“The slight decrease in interest rates in July means that it is easier to qualify for home loans – and there may be further decreases later this year. At the same time, the rate of house price growth over the past 12 months is has been considerably slower than the rate of salary growth,” explaind Rademeyer.
Betterbond statistics show that there has been a significant increase in the number of 100% home loans – from 39% to 41% in the past 12 months, the majority of which always go to first-time buyers in the lower income brackets.
What is more, the statistics, which represents 25% of all bonds registered in the Deeds Office, showed that the average price in the first-time buyer sector increased by 4.3% in the 12 months to end-July (compared to 5,6% in the previous 12 months), while the latest available Bankserve figures put the rate of salary growth in the 12 months to end-Jun at 6,7%.
“Contrary to our expectations for the current market phase, the percentage of home loan applications submitted by first-time buyers also showed a year-on-year increase in July to 47,7% (from 46,1%),” said Rademeyer, “and the percentage of approvals that went to first-time buyers also improved, from 38% to 39%.
Rademeyer concluded by stating that recent economic and political upheavals have impacted the real estate market, however, the fact that Betterbond’s total approval ratio is 76% speaks of the overall improved financial position of its borrowers. Applicants are in better financial shape, having spent time paying off other debt, leaving them with more discretionary income to pay home loan instalments.