The age of the access-bond is not over
IolProperty - South Africa
Two banks this week rubbished a claim made by a non-bank lender that "the age of the access bond is over". Access bonds are alive and well, and borrowing through your home loan remains one of the cheapest forms of credit.
However, the days of having unfettered access to the equity in your property have long been a thing of the past.
Before the introduction of the National Credit Act (NCA) in June 2006, it was relatively easy to access additional capital through your home loan. But since the NCA, if you want to borrow against the appreciation of your property, you will have to undergo an affordability assessment, which may trigger an increase in your lending rate.
Praven Subbramoney, the chief executive of private lending at First National Bank (FNB), explains the difference between accessing "pre-paid funds" in your home loan and accessing equity in your property: "In a typical home-loan account, your monthly instalment is a combination of capital, interest and fees. This repayment is known as the contractual repayment. Any payment over and above your monthly instalment is referred to as prepaid funds."
Selling for Emigration and “Semi-gration” purposes
FNB - South Africa
In conclusion, both emigration and “semi-gration”-related home selling have risen mildly in recent years, but emigration-related selling is not at high levels compared to the estimates of 2008.
Within South Africa’s major regions, the estimates point to confidence levels in the Western Cape region as being higher amongst home sellers and repeat buyers. Confidence is driven by a combination of economic performance as well as perceptions of regional management, while lifestyle also plays a role in location choice. This higher confidence level doesn’t come out in the Western Cape’s emigration rate, which is very similar to the large metros of Gauteng and Ethekwini.
However, it comes out in the survey of selling in order to “relocate to another SA region”, where the majority of agents believe the Western Cape to be the major destination for these sellers, while the province is estimated to have by far the fewest departees.
Emigration and "Semi-gration"
Leave yourself some breathing room when buying property
Re/Max - South Africa
First-time homebuyers should have a clear idea of what they can comfortably afford on their home repayment each month before starting to look for a property, says Adrian Goslett of RE/MAX.
"It is important to remember that while it seems like the current interest rate hiking cycle is coming to an end, it does not mean that the homebuyer won't have to deal with rate hikes in the future. It is for this reason that an allowance has to be made to buffer any future rate increases of at least 1% or R100 for every R100 000 that the homebuyer has borrowed from their respective lender," says Goslett.
"A homeowner extended to the financial limit is in a vulnerable position, especially if they don't have a contingency plan in place."
He adds that buyers can use an affordability calculator online or for a more in-depth accurate measure they can consult with a bond originator who will be able to assist them to determine what amount they can afford. "Because banks place a heavy reliance on creditworthiness, an originator can also pre-empt corrective measures for the purchaser to take before they submit a live loan application to the banks. This will ensure that the buyer has the best possible chance of obtaining the finance when they apply," says Goslett.
Mortgage Market Transaction Growth
FNB - South Africa
The South Africa Reserve Bank (SARB) Leading Indicator has recently started to edge higher, a reflection of some recent global economic growth improvements which can contribute, along with domestic drought alleviation, to mildly higher economic growth this year.
However, it may be some time before this translates into positive growth in new residential mortgage lending, after the sector neared the end of 2016 still in decline.
Using Deeds data for property transactions registered by individuals (“natural persons”) under R10m in value, which we believe to be overwhelmingly residential transactions, we estimate the trends in total transactions as well as split between bonded transactions and un-bonded (“cash”) transactions.