New data by financial services company, FNB, finds that 100% mortgage loans are still a common offering by lenders in South Africa.<\/p>\n
Using Deeds data for transactions undertaken by individuals, FNB found that homes where the bond registered is between 100% and 109% of the home transaction value, were estimated at 41.5% of the total number of bonds identified in the second quarter of 2016.<\/p>\n
This percentage is slightly lower than the 43.1% multi-year high reached in the final quarter of 2015, but not sufficiently lower as to draw any conclusions regarding a possible declining trend yet, said FNB household and property sector strategist, John Loos.<\/p>\n
These most recent estimates of the percentage of bonds falling into the 100-109% Loan-to-Purchase Price (LTP) band remain well-below the high point of 65% reached in the second quarter of 2007, but well above the post-boom low of 25.4% reached in the third quarter of 2009, FNB said.<\/p>\n
During the first quarter of 2016 the bank identified 9,951 bonded transactions by individuals in the 100%-109% LTP range, more than double the 4,117 low of the third quarter of 2009, but well down on the 33,825 high reached in Q3 of 2006.<\/p>\n
Unsurprisingly, FNB noted that people with lower value properties were more likely to take out a 100% loan.<\/p>\n
FNB split the market into Quintiles based on the value of transactions by individuals. The top 20% of transactions by value are labeled ‘Quintile 1’, while the bottom 20% of transactions by value are labeled ‘Quintile 5.<\/p>\n
The average transaction values per quintile were:<\/p>\n
Examining the distribution of Loan-to-Purchase Price Ratios (LTP) by price quintiles, the bank found that Quintile 4 is most highly dependent on 100%-109% loans, with the share of these loans making up 49.5% of its total mortgage loans to individuals in the 2nd quarter.<\/p>\n
Quintile 3 is next with 42.2% of its loans in the 100-109% LTP bracket, while the lowest dependence on 100%+ loans is in the most affluent Quintile 1, at 22.1%.<\/p>\n
How much money the average house costs a first-time buyer in South Africa<\/strong><\/a><\/p>\n This is how much the average house costs in South Africa<\/a><\/strong><\/p>\n