Pent-up demand following the hard lockdown and low-interest rates are driving serious growth in home loan applications, with bond originators confirming first-time buyers are finding a sweet spot in the "R750k to R2m price band".
Ooba data shows that in June 2020, 68% of our home loan applicants were asking for a 100% bond.
"This is 15% more than in June 2019, and banks are still coming to the party on these applications, with our approval rate on 100% bonds tracking at over 80%," says Rhys Dyer, CEO of Ooba.
Dyer also notes that there is a higher rate of lending without a deposit, this is reflected in the steep drop of 36.8% in the Average Deposit as a Percentage of Purchase Price year-on-year for the second quarter.
"Similarly, the Average Deposit for First-Time Buyers also fell by 34.8% for the same period.”
Carl Coetzee, CEO of BetterBond says, "Since January 2020, the prime lending rate has dropped by an unprecedented 27.5%, from 10% to 7.25%, with the potential for additional rate cuts before year-end.
"Not only do different bond quotes help secure the most favourable interest rate but the data also indicates that the more banks that are applied to, the more favourable the interest rate is likely to be.
However, Dyer says in terms of interest rates offered by banks, "the average rate offered has increased by 0.15% year-on-year for the second quarter".
"The cost of funding for banks has increased and this increase is being passed on to homebuyers. This means banks are offering fewer home loans at below prime lending rate than previously, and therefore it is even more essential to use a home loans comparison service to secure the best interest rates in the market."