Bond Approval Rates Climb!
Category News
The continued rise in home loan applications since lockdown restrictions were eased at the start of June suggests that a modest market recovery is underway.
"We saw application volumes increase in the first few weeks of June, as property transactions were able to resume, and now it looks as if this trend is set to continue. The number of home loan applications has tripled since May; the figures are now in line with levels seen before the pandemic", says Carl Coetzee, Chief Executive of BetterBond.
A monthly overview shows that the volume of loan applications is steadily increasing, with 30% more in June than in 2019. It is also reported that the positive market activity is evident across the entire country, with overall the business of the company at 90% of its annual pre-Covid target. General market statistics indicate that the average bank approval rate for bonds is at 75%, only slightly down from previous months and above the rate of 68% seen in 2018.
Back on home-soil, Francois Louw, Managing Director of Louw & Coetzee Properties, says that 61% of offers signed over the last two weeks in his own agency, were subject to bond financing. And of that number, so far all applications have been successful. This clearly indicates a positive response in the banks' approval rates and Louw agrees with the view that the banks still have a healthy appetite to lend.
With another 18 contracts signed in the last 2 weeks, bringing the agency's total contracts signed since the start of lockdown to a staggering 56 by June 30th, Louw is positive that the healthy lending appetite of the banks will stimulate a positive market growth. The positive market reaction is especially evident in areas with a diverse offering in properties located close to schools or thriving business-centres, in security complexes or estates and excellently located value-for-money investments.
With the Cape Town Deeds Office now mostly in full swing, the agency is seeing bond transactions linked to property transfers taking anything from 5 - 6 weeks from date of lodgement in the Deeds Office. However, Louw emphasizes that the bond registration timeline is also subject to each bank's approval process prior to lodgement - meaning each bond application will have to go through a specific approval structure of that bank, adding a subjective timeframe to the transfer process before the transaction can be lodged.
As agency, we are positive about the market movement, especially in the Northern Suburbs, and we are now laying the foundations to become stronger post-covid.
Sales statistics: Louw & Coetzee Properties
Content reference: Private Property
Article by: Alet van Zyl I Associate Director & Head of Marketing
Author: Louw & Coetzee Properties
