This is the average bond size in South Africa

Bond originator, BetterBond says it assisted almost 34,000 buyers to acquire their new homes over the past 12 months, at an average price of R1.1 million.

It said that the average age of these buyers was 37, and at an interest rate of 10.25%, the average monthly repayment on their loans is R8,631.

According to BetterBond, its statistics represent 25% of all residential bonds being registered in the Deeds Office. The average approved bond size has increased by 4.5% in the past 12 months, while the average house price has increase by just 2.2%, it said.

“These figures correspond to a decline in the average percentage of purchase price being paid as a deposit in the year to end-August, from 22% to 20%,” said CEO, Shaun Rademeyer.

This, he said, is mostly due to an improvement in disposable incomes, which the BankservAfrica Disposable Salary Index shows as having increased for the fifth consecutive month in July.

“Wage increases, declining inflation and a small interest rate decrease have all played a part in this growth, which simply means that many prospective homebuyers now have more of their take-home pay available to put towards a monthly bond repayment.

“This is excellent news for the real estate industry, because it makes the banks more likely to approve home loan applications – and to lend a bigger proportion of the home purchase price. And taken together with the drastic slowdown in house price growth over the past 12 months from 9.9% to just 2.2%, this definitely opens the door to more successful home sales,” Rademeyer said.

He warned, however, that the economy is in a fragile state and there is a higher risk that borrowers could suddenly become unemployed. Moreover, approximately 25% of home loan applications submitted are still being declined outright due to credit record problems.

“What is more, only 36% are receiving immediate approval by the first bank to receive the application, which means that prospective borrowers who are applying for home loans on their own only have a very slim chance of their application being approved.”

Read: These are the types of homes South African millennials in their 20s and 30s are buying

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This is the average bond size in South Africa