PROPERTY: Record Bond Applications And Approvals
Recent Western Cape Business News
ooba, South Africa’s leading bond originator, says the number of bond applications in March 2011 reached a three-year high.
ooba statistics revealed that the average number of bond applications in March was the highest level recorded for nearly three years (since May 2008) and is 36% higher than the average monthly application intake recorded in 2010. March volumes are however only 36% of the application volumes recorded at the peak of the market in May 2007.
The levels of approved home loans also reached a recent high in March 2011. ooba’s March figures was the highest value of approved home loans since October 2008, two and a half years ago.
According to Saul Geffen, CEO of ooba, he expects the growth to continue. “ooba has experienced consistent month-on-month increases in application intake since the beginning of 2011. February was already significantly up, and March exceeded February by some margin. The good news is that we expect to see this growth continuing.”
Geffen says the reduction in interest rates of 650 basis points since 2008 is definitely a contributing factor to this increase in applications. “With interest rates currently at a 30 year low, improved affordability has enabled many would-be homeowners to take the leap, as the cost of servicing a bond has reduced considerably.
“The improved affordability, combined with subdued property price growth, low inflation rates and real wage growth, has combined to make this a favourable environment for homebuyers.”
Geffen says the continued relaxation in lending criteria by the major lenders is also a contributor to this rise in applications and approvals. “The ability to obtain financing is one of the biggest drivers in the property market, so the consistent improvements are a positive indicator for the property market going forward.”
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