There has been a marked increase in the number of home loans that have been granted by the banks over the past year, and this positive trend is expected to continue throughout 2018.

So says Tessa Aggenbacht of Cycad Estates, a leading property specialist operating in the larger West Rand area, home to some of the most reasonably-priced residential properties in relation to other central-business districts in-and-around “Jozi”.

She attributes this trend, which already had a noticeable positive impact on house sales in this area, to a marked improvement in the financial situation of many buyers over the past year. This has also been fueled by the recent easing in interest rates and the so-called “new era” that was ushered in by Cyril Ramaphosa earlier this year.

“While more people are partaking in the market, the lower interest rates have also brought welcome relief to stretched bond holders. With additional disposable income in their budgets, they are now in a position to make higher-than-required bond repayments to the banks. In turn, financial institutions are also benefiting from an influx of clients, who are in a much more favourable position to enter into long-term commitments,” Aggenbacht says.

Heightened competition among new participants in the home-loan industry has also contributed towards an increase in bonds being granted by the banks. This is demonstrated by a noticeable rise in approvals of home-loan applications by the first bank to receive submissions from buyers.

Cycad Estates’ bond originator recorded the highest home-loan approval rate in the first quarter of 2018 since the National Credit Act was implemented more than a decade ago. Meanwhile, another participant reported as much as a four percent increase in the number of home loans granted over the past year.

Certainly, this scenario has also had a positive influence on the cost of credit. Cycad Estates’ bond originator, for example, has secured interest rates of 0,16% above prime in the first quarter of this year, versus 0,35% above prime over the same period last year.

Importantly, banks have also been willing to lend the full value of the property without a deposit. This has been a major advantage for the estate agency’s clientele, especially for those first-time buyers, who have a clean credit history and can, therefore, comfortably afford their monthly repayment instalments.

Aggenbacht refers to a survey undertaken by a leading bond originator noting that the average deposit for first-time buyers as a percentage of purchase price is 12,5%. This is compared to 14% in the first quarter in 2017, while the average deposit over the entire market dropped by 6,4% yearly.

While now may be the ideal market for buyers, there are clear indications that property prices will also strengthen over time, considering the more stable economic outlook versus a year ago.

“Certainly, the extremely weak sentiment and low consumer confidence in the final quarter of 2017 are still being felt in the form of suppressed house prices. However, leading financial institutions all agree that there will be a slight recovery in the housing market this year, with average purchase prices having already increased by 3,4%, and up by up to 3,5% for first time buyers,” Aggenbacht says.

She concludes that Cycad Estates is looking forward to continuing assisting the growing number of people looking to settle in the area, with its other major draw cards being a beautiful natural environment, abundance of malls, as well as easy and quick access to major urban nodes!