Get cracking if you want to get into the market.

Prospective homebuyers should accelerate their plans now if they still want to benefit from the “double positive” of low interest rates and low property prices.

“Home values have begun to rise in many parts of the country – and even though the average rate of growth will probably be below the rate of inflation for the next couple of years, this is really of little relevance to first-time buyers,” says Berry Everitt.

“What counts for them is that whichever home they want to buy already costs more than it did last year, and will cost even more next year. The longer they wait, the more difficult it is going to be to get on to that first rung of the property ladder.”

For one thing, he says, every increase in property prices means that the prospective buyer has either to earn more or increase the size of his deposit to qualify for a home loan, even if interest rates stay the same.

“For example, if a home now priced at R500 000 were to increase in value this year by just 5%, the amount needed for a 10% deposit would rise from R50 000 to R55 000. At the same time, the size of the 90% home loan required would rise from R450 000 to R495 000 and the prospective buyer would have to earn about R1 500 more a month to qualify.

Everitt says that while this is a simple example, the principles hold true right across the price spectrum.

“Then there’s the question of interest rates. If imported inflation due to the economic troubles in Europe and the rising oil price causes the Reserve Bank to raise the repo rate, banks will most likely raise their mortgage rates as well, and once again buyers will have to earn more to qualify for loans.

“If the base home loan rate were to rise just one percentage point from 9% to 10%, for example, the buyer of the R500 000 home in our example would immediately need to earn R1 000 a month more to qualify. What is more, the monthly repayment on the loan would rise by around R300, so there would be an ongoing long-term effect on the family’s finances.

In short, he says, if you are an aspirant homeowner, the sooner you put your plans into action, the better.

If you would like to speak to a Professional Mortgage Specialist about your lending requirements, please phone Mortgage Plus Bond Originators on:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Buy while interest rates are low

Now is as good a time as any to buy a home thanks to the slowdown in South Africa’s residential property price growth.

According to Mortgage Plus, as the economy recovers, property prices remain reasonable and the effect of lower interest rates is felt.

Mr AM Prinsloo, provincial sales manager at Mortgage Plus says confidence will return to the bricks and mortar investments.

Would-be home buyers and property investors with cash have an opportunity to get into the property market, he says.

Although the property market got off to a slow start in 2011, estate agents are seeing an improvement in the market.

Pam Golding Properties (PGP) report that sales are being concluded with more people purchasing homes in the more affordable category priced under R2 million.

Last month, Absa Home Loans said affordability remains key in the housing market and more buyers will be looking at smaller and affordable properties.

Carol Reynolds area principal for PGP Durban North and La Lucia says affordability remains the key driver of bond acceptance and that it is imperative to factor household running costs into the equation when looking at buyer affordability.

“Buyers who have the means to put down a sizeable deposit will be better positioned to negotiate with the banks.”

She says in general, one aims for between 15 and 20 percent deposit as banks are beginning to look more favourably on 10 percent deposits.

FNB Home Loans reports a lower rate of household sector indebtedness compared to the previous quarter.

According to the FNB Household Sector and Consumer Update Q2 2011 report, although household indebtedness has come down, there has not been an improvement in the household sector’s saving rate lately.

John Loos, FNB Home Loans property strategist says the household sector does not save enough to fully cover the depreciation of fixed assets in its possessions.

For many households, this translates to lack of money to put down for a deposit towards buying a new home while in others, this impacts on their ability to repay their mortgage loans.

For buyers who have saved money and can afford to buy, now presents a good opportunity as interest rates are at their lowest, he says.

He explains that in the past few years, estate agents surveyed pointed to a greater portion of home owners not doing full home maintenance and the number of those still maintaining their homes or doing any upgrades has declined since the boom years.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za