Good News for Property Buyers

Bank managers loosen screws for property buyers
Realestateweb.co.za reporter
08 September 2008

At last some good news for the residential sector: Mortgage rejection figures have eased slightly and buyers get bigger interest rate discounts.

At last there is some good news for the residential real estate sector.

Mortgage rejection figures eased slightly and buyers got better interest rate discounts in August, new figures from the country's largest mortgage originator, ooba, suggest.

Ooba issued its second "oobarometer" price index on Monday. Price trends still look horrible, with the average house price down from R821 351 in August last year to R776 048 in the same month this year.

But, noted ooba Chief Executive Officer Saul Geffen: "While house prices continue their downward trend, there have been improvements in average decline ratios and rate concessions."

The average decline ratio - or percentage of all loan applications initially rejected by banks - improved by 1,3% to 49,8%, he said. Of those, however, more than 30% received a home loan from another bank.

Interest rate discounts, or concessions, to the prime interest rate "also show a slight improvement on last month".

It was at about 1,24% compared to 1,21% in July, said ooba. The top 10% of customers are enjoying a discount of just under 2% to prime (1,91%), said the originator.

Other trends noted by ooba include that:

* First-time buyers are still feeling the pinch, with the average purchase price for this segment down to about R490 000. This figure a year ago was about R550 000.
* Deposits have also risen sharply, from 11% to just under 20% (18,8%), "reflecting the significant shift in banks' lending criteria".

Find property for sale in the False Bay area of Cape Town.