White applicants for properties has been consistently less than the combined total of Black and Coloured applicants over the last three years.

The most notable of these trends is that the percentage of White applicants has been consistently less than the combined total of Black and Coloured applicants over the last three years.

The proportion of Black applicants has risen steadily over the last few years, averaging 42% during 2009. However, this percentage has dipped in the first four months of 2010 to 38%.

In contrast, the proportion of white applicants has risen from an average of 43% in 2009 to 47% during the first four months of 2010. The proportion of Asian and Coloured applicants has remained constant since the beginning of 2008, averaging 8% and 7% respectively.

According to Saul Geffen, the downward trend in the percentage of Black applicants in 2010 can likely be attributed to the fact that the tough economic conditions and stricter lending criteria have had a bigger impact on potential buyers at the lower end of the property price spectrum.

The data shows that potential Black buyers make up 60-70% of total applicants for properties valued at less than R500 000. This proportion drops significantly to around 30% for properties valued at between R500 000 and R1 million, and 10-20% for properties valued at over R1 million.

“The stricter bank lending criteria imposed under the NCA has also made it particularly tough for first time home buyers who aren’t able to meet the affordability criteria.”

However, Geffen says that as the economy recovers, the percentage of Black buyers will likely re-commence its upward trend. “We expect to see an increasing percentage of Black buyers in line with the shifting  economic base in South Africa.” 

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Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

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Are you in the dark as to why your bond application was declined, or why a bank will not give you the amount you requested?

Rob Lawrence, says two main sets of data go into the assessments of applicants looking for bonds on residential property.

“First, the applicant’s credit profile (i.e. his track record as a payer on accounts) will be investigated. Each applicant’s behavioural pattern will then be scored against a number of set criteria designed to give a picture of his lifestyle and steadiness. The banks will use this to ‘score’ his lifestyle risk.

“It would be a plus factor if, for example, he has lived in his home for over three years. If he has a landline telephone, that too is considered good. If he has been in the same job for over two years, that would be to the banks an indication of his stability and creditworthiness.

“These and other factors are fed electronically into the bank’s rating system and can easily result in the applicant being turned away when he is in fact a good credit risk.

“It is, therefore important for the applicant to talk to a bond originator ” www.mortgagepluscc.co.za“ who can present his case in a favourable light.

“For example, the applicant may have had a promotional transfer, hence the reason for his being in a home only a few months or his previous firm, through no fault of his own, may have been liquidated or merged, forcing him to find a new job.

“The electronic system does not give explanations – it is a purely mechanical scorecard – but a good bond originator will show the bank the other side of the story – if there is one.”

Applicants, said Lawrence, often think that if they reduce the size of the bond they are asking for, they will have a better chance of success – but, if the scorecard behavioural findings are negative they will disqualify the applicant whatever the size of his bond request.

On the accounts side, said Lawrence, it is essential to show that no payments have been missed, and to bear in mind that banks have access to credit data on all previous bonds, overdrafts, store accounts, cell phone and telephone accounts and much else.

The banks use this information to evaluate a client’s payment profile – to discover if he is a good or bad payer.

“If he is a bad payer, no bank will want to lend him money.”

Lawrence warned that if an applicant tries to hide his payment defaults, this will be discovered – and it will prejudice his chances and could well cause the bank to decline him, or make him a much lower offer.

“A client may have had a very good reason for going into arrears, for instance he might have run up accounts due to a divorce or have high medical bills. A good originator can motivate a bank to reconsider a credit profile decline, if there is sufficient reason to do so.

“However, where credit records are not ‘squeaky clean’ and the issue is the credit profile (accounts not paid regularly), our team’s advice to bond applicants is to clean up all credit accounts, for at least the next six months, after which it will be possible to show the banks a positive payment profile and then re-apply for a bond.”

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For more assistance with regards to Applying for Home Loan Finance .
Email: morne@mortgagepluscc.co.za
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