Strong competition among banks to lend to home buyers – ooba
The property market is significantly influenced by sentiment and consumer confidence. Increased political uncertainty, low economic growth and inflationary pressures caused property buyers to ease off on new property purchases during 2017.
This was according to Rhys Dyer, CEO of bond originator ooba, who noted that reduced demand for property forced sellers to adjust their prices to meet the demands of a more cautious buyers’ market, resulting in negative price growth in real terms.
This is confirmed by FNB which pegged average house price growth at -2.4% in real terms as at November 2017.
“We expect the new ANC leadership to deliver improved policy certainty during 2018,” said Dyer. “If this happens, consumer sentiment will recuperate and boost demand in the property market. This in turn will drive increased property price growth over time. We can then expect the year-on-year property price growth to rise by 6% for the last quarter of 2018, compared to only 1.4% compared achieved for the fourth quarter of 2016.”
Ooba’s Q4 2017 statistics indicate more favourable home loan conditions, where the banks’ home loan books have performed well, with historically low levels of bad debts and arrears.
“It appears as if consumers are managing their debt well, with consumer affordability measures still improving off the highs of 2008 and 2009,” said Dyer. “As a result there is strong competition among banks to lend to home buyers. We expect a buoyant home loan lending environment in 2018.”
Improved lending conditions are evidenced by the increase in the ooba approval rate from 72.8% in in Q4 2016 to 73.6% in Q4 2017. The average interest rate ooba achieved for its customers also improved considerably from an average of 0.39% above prime (10.25%) in Q4 2016 to 0.18% above prime in Q4 2017.