Home Loan applications are higher but so too are the number of declines.
Applications for home loans in South Africa have increased by more than 40 percent in the first six months of the year. Lower interest rates have left buyers with extra cash in their pockets and therefore making property a more attractive investment.
But with house prices increasing by as much as 25 percent in the year to June, the number of declined home loan applications is also increasing. Standard Bank and Nedbank, two of SAâ€™s largest mortgage lenders, have been turning down slightly more bond applications than they were a year ago.
Data released by the four biggest home loan providers show that between 33 percent and 45 percent of all bond applications are turned down.
This is due to ever increasing house prices; lack of affordability; and bad credit ratings.
FNB has the highest rate of declines at between 40 percent and 45 percent.
What the Banks are saying:
FNB Home Loans
Ed Grondel, chief executive of FNB Home Loans, said: â€œWith house prices at ever increasing highs, people cannot afford them despite having more money in their pockets.â€
ABSA Home Loans
John Loos, a senior economist at Absa, believes that the current rate of price increases will not continue but â€œpotential investors in property should not be scared off, but rather be prepared for a lower rate of capital growthâ€.