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Home loan volumes decline significantly in ailing economy

Tags: quarter loan rate

The number of home Loan applications fell significantly in the third Quarter year-on-year due to lower demand for property as buyers struggled against weakening economic conditions, higher costs of living and increased interest rates.

The volume of home loan applications recorded in the third quarter by ooba Home Loans declined by 25% year-on-year, and down by 28% from the third quarter of 2021, before the start of the rates-hiking cycle, ooba’s figures showed.

However, lenders continued to ease access to home finance to further aid homebuyers in the more challenging market, the statistics showed.

Subdued property price growth provided affordable opportunities for homebuyers to acquire property, and a continued upward trend in deposits, ooba said.

“Despite the decision by the Reserve Bank to leave interest rates unchanged at the past two MPC meetings, an increase in the average deposit value signals home buyers have adopted a cautious approach when taking up elevated levels of debt,” ooba Home Loans CEO Rhys Dyer said.

“The banks’ willingness to continue to offer competitive rates, with an average rate below prime, paints a positive outlook for the property sector at the peak of the interest rate cycle,” he said.

The average interest rate awarded to ooba customers in the third quarter was 14 basis points cheaper than in the third quarter of 2022 – now at -0.44% below prime.

In addition, the average bank approval rate for ooba Home Loan applicants held steady at 82.9% for the third quarter – marginally lower than the 83.6% in the third quarter of 2022.

The average approved bond size for Q3 ’23 remains relatively static, coming in at R1 285 772, up from 0.9% from the third quarter of 2022.

“This slowing growth is attributed to slowing property price growth, to particularly first-time homebuyers choosing to put down higher deposits and to customers choosing properties that they can afford in a higher interest rate and loan repayment market,” Dyer said.


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Home loan volumes decline significantly in ailing economy


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