"I'm feeling bullish": Absa home loan boss
You might be pondering whether the worst is over for the residential real estate sector, but Absa's home loans' boss isn't in any doubt. He sees "light at the end of the tunnel and no train in sight".
Speaking on Monday to Realestateweb, property news division of the Moneyweb media group, Luthando Vutula said home loan applications were up month-on-month by a dramatic 20% in September. "This month will be an even better month," he predicted for October. Approvals for residential mortgage applications are also up, at Absa.
Vutula said: "I'm quite bullish, quite excited that (the market) will turn faster than we thought." He said the first half of 2010 was looking rosy.
"People are more positive," he said, thanks to affordability levels being back to around 2007 levels. This means the bank will now grant you much more in mortgage finance because so much less of the repayment is going into interest. Interest rates have fallen steadily since December.
Although Absa doesn't rule out easing its lending criteria further, for now it doesn't envisage granting 100% home loans and more, as some of its competitors are doing. It gives a mortgage of up to 95% of the price tag of the property to existing customers who approach it directly and mortgages of up to 90% via originators. The buyer must fund the balance with a deposit.
This is because prices will still have declined by the end of the year and Absa does not want "negative equity" scenarios, in other words where the house is costing more to pay off than it is worth. Absa expects the total decline in your house prices value to come in at about 3-4% for 2009, though the latest figures are showing price growth perking up.
Also seeing better-than-expected figures in September was ooba, South Africa's biggest mortgage origination organisation. ooba CEO Saul Geffen reported on Monday a 55% increase in the value of approved loans from April to September this year, with a 21% surge from August to September alone.
"We continue to see a marked improvement in application volumes as well as increases in approval rates. We have recorded continued increases in the value of approved bonds for the past five months, and mid-month data points to a further 18% increase for October. If the 18% growth for October is achieved, it will mean an 84% growth in ooba's approved loans since April," he said.
Geffen, like Vutula, attributed the improvement to the change in banks' lending criteria and the impact of the lower interest rates. Geffen said there has been an increase in average loan sizes as a result of the shift in banks lending criteria to lower deposit
"Banks are now targeting non-bank clients and rate concessions are becoming more aggressive. The improved appetite to lend will support the increased demand for property as transaction volumes continue to pick up," he predicted.
Last week Lightstone's latest repeat sales indices confirmed that house prices started leaving the doldrums and heading towards positive terrain from about June (click here to read "Residential property: house prices bouncing back").
Several estate agency groups have also been reporting an increase in interest from buyers.
House-hunters: negotiate the best property deal by having the facts at your finger tips. Click here to access Realestateweb's new property valuation tools! For less than R100 you can find out who owns a property, what they paid and whether they have a large mortgage - and what others have been paying in a suburb.
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Comments
Absa are still holding to 90-95% - I give them 'till the end of the year before they start giving 100% umbrellas away again.
by CT Landlord on October 19 2009, 13:33
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But it does not effect guys like us, we buy in the ups and downs because we know how to spot a deal.
The rest have to look at graphs and rely on averages, poor them...
Reality is the property market is slow it takes months if not years . .more
by Brennan on October 19 2009, 15:14
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What happened to some property guy,here on Realestate web, (I am not sure who, could be Rawson/Seef/Geffen), who said that he expects property prices to fall by 40%?????
by Moneweb Reader on October 19 2009, 15:20
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The mysterious 40% memo his PR guy took the can for.
by Another MW reader on October 19 2009, 15:26
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In some areas prices have fallen by more than 40%!
by hk on October 19 2009, 20:38
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Huge job losses unemployment = new property boom?
by Citizen on October 19 2009, 20:48
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This genius is celebrating because affordability levels are back to 2007 levels - so that would be just before the peak then - that would be the period when the real price was the highest it has been for 40 years. Yeah right, really . .more
by CJ Says on October 20 2009, 00:14
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Yet another setback for the property sceptics
by Chippie on October 20 2009, 06:54
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In a country blighted by cabinet ministers who feel it's perfectly OK to spend half a million on a hotel stay-over. In a country that has AT LEAST 56 municipalities effectively collapsed in all sectors.
In a country where their electricty bills and . .more
by ER on October 20 2009, 07:04
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ER must be either one of those suckers that doesn't own property and rents from somebody else, or he must be writing from overseas. Jissis old chap, life must be tough for you if you are still in South Africa? Talk about the glass is half empty !!! Can I . .more
by Chippie on October 20 2009, 08:48
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Sure it's a tough time to be a prop bear but bsuiness is picking up for me!
by Taxidermist specialising in prop bears on October 20 2009, 12:12
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That year 1999 cant be a reference to any type of normality.
Just like the recent bubble years where not normal, neither are the bad years considered normal.
Normal sits somewhere right in the middle
by bubblehead on October 20 2009, 13:23
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Tell me again how much less you pay on a 1mil bond now compared to a year ago? I believe in the region of 35% less on a monthly bond. That is what affordability means to the man in the street, not your graphs, doesn't matter how cool you think they are. . .more
by aajj on October 20 2009, 13:42
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Let's look at the old real graph again -
http://tinyurl.com/mm4uet
I would say about mid 2001 looked about normal - that would be about 23% real higher than 1999 - and 50% real lower than we are now.
Of course, in a crash, you . .more
by CJ Says on October 20 2009, 14:01
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I bought a unit around that time, October 2000 to be precise, where the rent was R2 700pm and the repayment on the bond with a 10% deposit was R2 800 odd. With a levy of R240 (with rates paid by the body corporate) the difference between buying and . .more
by CT Landlord on October 20 2009, 14:44
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market is definatly picking up, I can see it in my office with all of my agents, bonds are also much easier to get approved.
http://jkproperties.ilocals.info/
www.jkproperties.co.za/
by jkproperties on November 12 2009, 20:11
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