Home loan approval highest in 10 years - ooba | Fin24

Home loan approval highest in 10 years - ooba

Apr 26 2018 11:54

Cape Town - Banks are showing an increased appetite to lend out money, according to Rhys Dyer, CEO of home loan originator ooba.

He was commenting on property statistics reflected in the latest "oobarometer" for the first quarter of 2018, released on Thursday.
“In the first quarter of 2018 we recorded the highest home loan approval rate in over ten years since the National Credit Act was implemented,” said Dyer.

Ooba’s total approval rate of 76.9% showed an increase of 4.9% compared to the first quarter of 2017.

"Consumers appear to be managing their debt much better and the current low-interest-rate lending environment, coupled with slower growth in property prices, means getting a bond for your home is a great deal more affordable now than it was 12 months ago," said Dyer.

Dyer argued that consumers were benefitting from cheaper access to credit due to stronger competition among banks to lend. This is reflected in the average interest rate ooba achieved for its customers, which improved from 0.35% above prime in the first quarter of 2017 to 0.16% above prime in the first quarter of 2018.

“Banks are increasingly willing to lend the full value of a property without requiring a deposit,” he said. 

This trend can be seen in ooba’s quarterly statistics. For the first quarter of 2018, the average deposit for first-time buyers as a percentage of purchase price was 12.5% compared to 14% in the first quarter of 2017. The average deposit over the entire market also declined by 6.4% year-on-year.

“Although it’s technically a buyers’ market, these trends are also positive for homeowners struggling to sell their properties as it increases the pool of potential properties buyers can afford,” said Dyer.

Statistics from ooba show the average purchase price is up by only 3.4% from R1 167 242 in the first quarter of 2017 to R1 206 519 in the second quarter of 2018. The average purchase price of first-time buyers increased by 3.5% to R907 693.

“Although property price growth is still sluggish and below the inflation rate, there is confidence in the market that property prices will grow more strongly over time, as the economy moves into a stronger growth period, buoyed by improved political and economic sentiment," said Dyer.

(Source: ooba)

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ooba  |  property  |  sa economy  |  home loans


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