Market Overview from ooba

According to ooba, one of South Africa’s largest mortgage originators, there have been some positive trends in the mortgage business over the past few months.

It’s interesting to note that, according to statistics in the oobarometer, the average purchase price of property has increased from R 819 997 in December 2010, to R 870 564 in December 2011.

The average approved bond amount has also increased from R 697 572 in December 2010, to R 722 529 in December 2011.  Bond applications for the same period have increased 25%, showing that buyers are keen to purchase at current market prices.

Of concern though is the average effective approval ratio of 59.8%, compared to 67.8% in December 2010.

That means for every 10 finance applications, 6 will be approved, down from 7 out of 10 a year ago.  This confirms the poor appetite the banks have for home loan finance, and the fact that they are picking only the “low-risk” deals.

There is great value to purchasers to use a mortgage originator like ooba as 22% of all applications that are initially declined by one bank, are approved by another bank.  This means that, if you are serious about purchasing, you need to use a professional loans consultant who can submit your application to mutliple banks and give you a much greater chance of approval from at least one bank.

If you are looking for a 100% bond though, be prepared for dissapointment.  The ooba statistics show that only about 20% of all 100% bond applications are approved at 100%, with another 21% approved at a lower Loan-to-value (such as 90%), and 59% being declined outright.

So, if you are looking to purchase, try to save enough for a 10% deposit where your chance of obtaining finance more than doubles.  Sellers and estate agents are aware of the low success rate of 100% bond approvals – so the chances of your offer being approved are greatly improved if you have a deposit to put down, and if you use a mortgage originator to greatly increase your chances of approval.

Source: ooba

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