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Things are looking up for home loans

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Bank again keen to lend to buyers

Bond originator ooba believes property statistics from last year’s fourth quarter indicate more favourable home loan conditions, even though 2017 was tough for the property market.

The banks’ home loan books have performed well, with historically low levels of bad debts and arrears, says ooba chief executive Rhys Dyer.

“It appears consumers are managing their debt well, with consumer affordability measures still improving off the highs of 2008 and 2009. This means there is strong competition among banks to lend to buyers. We expect a buoyant home loan lending environment in 2018.”

His views are borne out by the increase in the ooba approval rate from 72.8% in Q4 2016 to 73.6% in Q4 2017. The average interest rate ooba achieved for its customers also improved from an average of 0.39% above prime in Q4 2016 to 0.18% in Q4 2017.

“The market presents an opportune time to invest in property before any good news in the economy factors into higher property prices. The market is influenced by sentiment and consumer confidence. Increased political uncertainty, low economic growth and inflationary pressures caused buyers to ease off on new property purchases last year. Reduced demand forced sellers to adjust their prices to meet the demands of a more cautious buyers’ market, resulting in negative price-growth in real terms when inflation is factored in.”

Dyer expects the new ANC leadership to deliver improved policy certainty this year. If this happens, consumer sentiment will recuperate and boost demand in the property market. This in turn will drive increased property-price growth over time.

“We can then expect the year-on-year property price-growth to rise by 6% for the last quarter of 2018, compared to only 1.4% achieved for the fourth quarter of 2016,” says Dyer.

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