More than 50 percent of home loan applications are still being declined despite many banks relaxing their credit criteria.

The gradual improvement in the residential property market since the second half of last year has been attributed largely to the relaxation by banks of their credit criteria and the reduction in interest rates, enabling consumers to reduce their high debt levels.

Mortgage Plus said yesterday an average of 51.5 percent of its home loan applications were declined last month compared with 50.2 percent in February last year. The ratio of home loan applications that were declined by one lender but approved by another had also hardly changed in the past year.

Saul Geffen, said technical reasons were responsible for the decline ratio remaining the same. He said there had been a higher intake of low- or no-deposit home loan applications, which had changed the mix of applications and resulted in the decline ratio remaining the same.

He said the proportion of consumers applying for 100 percent bonds had jumped to more than 40 percent of its overall applications from 18 percent in September last year.

The overall approval rate on these applications was lower. Nearly half of the approvals on 100 percent bond applications were subject to deposits of 10 percent to 20 percent.

“The decline rate should be understood in the context of the significant increases in application volumes rather than increases in bank rejections.

“Despite lenders having generally increased approval rates, a higher proportion of applications are now not being approved due to an increase in the proportion of marginal applicants who are trying to take advantage of the improved lending environment, particularly 100 percent loans which have stricter criteria to fulfil,” he said.
Statistics showed that the average purchase price of a house increased by 11.4 percent to R895 031 last month from a year earlier and the average approved bond size had risen by 13.9 percent to R721 107 .

The average deposit as a percentage of the purchase price declined to 19.4 percent last month from 21.3 percent in February last year.

Luthando Vutula, the managing executive of Absa Home Loans, said yesterday the volume of home loan applications it received had improved by about 18 percent between September and October last year and continued to increase.

He said Absa only provided 100 percent home loans to the affordable market and not to the traditional market. About 15 percent of the applications Absa received monthly were for 100 percent home loans.

Repossessions had declined from about 50 a month at the peak of the credit crisis last year to less than 35 a month.

Rael Levitt, the chief executive of Auction Alliance, said repossessions peaked in the second quarter of last year at about 1 500 houses a month going under the hammer but had dropped sharply since then.

Levitt anticipated it would only do 400 distressed sales this month. The prices achieved at auctions had also improved by about 30 percent year on year.

CONTACT US
For more assistance with regards to Applying for Home Loan Finance .
Email: morne@mortgagepluscc.co.za
Ph: 011.327.4489
or Complete This Online Form

With house prices firmly back on an upward trend and banks beginning to relax their lending criteria for home loans, consumers are increasingly looking to get back onto the housing ladder.

As the property market becomes more competitive, however, it is vital for consumers to make sure they are well prepared and can act quickly when an offer is accepted.

Craig Deats – has the following advice for potential homebuyers when applying for a home loan to ensure they have the ultimate opportunity for success on their bond applications.

1. Make sure you are aware of all the costs involved in buying a home. In addition to arranging a home loan and paying a deposit there are a number of other costs involved including legal costs, transfer duty, bond registration fee and bank charges. These will need to be paid in order to complete the process.

2. It is advisable to have a clean credit record before applying for a home loan. As a result of the National Credit Act and current market conditions, banks have tightened their lending criteria and a negative credit record may impact the result of your home loan application.

3. Provide your bank or bond originator upfront with all required information and documentation requested. Each bank has their own set of criteria so ensure that you have met the requirements of each lender.

4. Make use of a reputable bond originator, who can assist you by facilitating bond negotiations with all major lenders in one simple process from prequalification to registration, with less hassle and minimal paperwork. They also provide regular feedback of progress on your application.- www.mortgagepluscc.co.za 

5. Shop around with multiple lenders. According to the latest statistics, 19.8% of applications in January 2010 that were declined by one lender were approved by another, indicating that it is important to approach multiple lenders to ensure a positive outcome on your home loan. Shopping around also ensures that you get the best rate on offer.

CONTACT US
For more assistance with regards to Applying for Home Loan Finance .
Email: morne@mortgagepluscc.co.za
Ph: 011.327.4489
or Complete This Online Form