A sharp drop in the number of 100% home loans granted in August compared with June and July indicates that the banks, concerned about the still-high levels of household debt, are once more tightening up on credit qualification requirements for prospective homebuyers.

So says Rudi Botha, CEO of BetterBond, which as SA’s biggest mortgage originator assists thousands of buyers a month to obtain home loans. “Our latest statistics show that the percentage of home loans granted for 100% of the property purchase price fell to 35% in August from 39% in July, and 41% in June.

“Obviously, the banks are worried by the fact that the average household debt to income ratio is still stuck at around 75% at a time when consumers are facing rising energy, water, transport, food, education and medical costs that will undoubtedly eat into whatever disposable income they have left, and limit their ability to make bond repayments.

“Consequently, they are looking to lower those repayments, and their own risk, by insisting that a greater percentage of home loan applicants pay a deposit.”

What is more, he says, the average deposit required by those who did not obtain 100% bonds rose to 17,4% of the property purchase price in August, from 16,5% in July. “And for first-time buyers, the average deposit payable rose to 11,6% of purchase price from 9% in July, even though the average first-time purchase price dropped from R641 000 to R613 000.”

There is, however, some positive news in the BetterBond statistics, which represent 25% of all residential mortgage bonds being registered in the Deeds Office and include applications to, and bond grants from, all the major lending banks in SA.

“For a start,” says Botha, “the total value of new bonds being granted monthly through BetterBond has been holding steady for some time at around R2,4bn a month, indicating continued housing demand and growing stability in the market.

“In addition, first-time buyers still accounted for more than 40% of home-loan applications in August, and received 37% of all home loan approvals, which reveals a healthy influx of ‘new blood’ into the market that bodes well for the future. And of course first-time buyers are still receiving the lion’s share of the 100% home loans that are being granted.”

The BetterBond statistics also reveal that the majority of home loans currently being approved (38%) are for purchases in the R500 000 to R1m price category, which corresponds largely with the percentage of loans being granted to first-time buyers.