PUBLISHED 4 DEC 2009
There has been a dramatic increase in the
number of home loan applications being made in the past few months as
interest rate decreases started to filter through to the market and
100% loans became available once more.
Deon Lessing, marketing director of Betterbond, South Africa’s biggest
mortgage originator, says his company has experienced a 90% increase in
loan applications since September and that although this is coming off
a low base, it definitely reflects increased consumer confidence and
demand for property.
He says that as with investments on the stock exchange, or any
investments for that matter, investments in property are bound to be
cyclical with peaks and troughs. “And now property is returning as a
sought-after asset class.
“The increase in activity is a big indicator of that investment
interest - but there is also a growing awareness among all sorts of
buyers of the fact that the market has already bottomed out and that
prices are starting to rise once more, meaning that there is a limited
time now to secure the best deals."
More good news is that the growth in household credit outstanding is
slowing down rapidly. According to the latest FNB statistics, it
dropped to 2,3% y/y in October, from 3,1% y/y in September and if this
trend continues it will lead to significant progress being made in
reducing the average household debt-to-disposaable income ratio, which
currently stands at 76,3%.
This combined with the projected growth in disposable income next year
as the economy improves should put households back on a healthier
financial footing - and enable more of them to meet the strict
qualification criteria for home loans.
A lower debt to income ratio will also, of course, protect existing
homeowners should interest rates start to go up again next year.
Source: Property Trader