Yearly Archives: 2014

Technology makes homebuyers happy

We know that online resources are increasingly important to homebuyers, with as many as nine out of 10 buyers in some areas using the Internet during the purchase process to scan listings and identify the homes they want to view, to contact agents in the areas they like and to obtain more information about those areas.

However, a new survey by Discover Home Loans in the US shows that buyers who make use of online resources also tend to feel much more empowered in the purchase process (76%) and much more satisfied with their eventual decisions (69%).

Almost half the survey respondents said technology definitely helped them save money on buying a home, and 92% said it definitely saved them time and shortened their home search period.

“Buyers are increasingly looking to play a more active and informed role in the home purchase process and turning to the latest technologies to find the information they need,” says TJ Freeborn, senior manager of customer experience at Discover Home Loans.

“In addition, while 83% of survey respondents also said they would prefer to work with estate agents to complete the purchase of a home, 74% said they would want those agents to be tech savvy.”

Meanwhile, estate agents also need to know that homebuyers are showing an increasing appetite for smart home technology.

In another new survey, by ERA Real Estate and HGTV in the US, almost half the respondents (46%) said they regarded smart home technology as important in their current or next homes for reasons of comfort, safety, and cost savings.

And 51% said they would consider installing smart home technology just to make their home more marketable to future home buyers.

“While still an evolving trend, smart home enhancements clearly have the potential to increase savings, safety, and resale value,” says Charlie Young, president and CEO of ERA Real Estate.

“As we have seen through this survey and our one-on-one interactions with buyers and sellers, a smart home that integrates with smartphones is one that is well positioned for the future and aligns with a growing reliance on mobile technology.”

While smart home technology has often been thought to be driven by mainly security, survey researchers found that homeowners were strongly motivated to install and use it because of its money-saving potential, such as through automated climate control, energy management, remote home monitoring, and lighting control systems.

Don’t let the holidays put you off

Are you having trouble convincing sellers to let you list and market their properties in the holiday season? And are you half-persuaded that potential buyers will be too busy eating, entertaining and soaking up the sun to visit your show houses?

Well, you might like to know that several studies have now shown that homes listed in November, December and January are more likely to sell, more likely to sell quickly and more likely to attract offers at close to the asking price.

Agents are divided on the reasons for this but some of the factors in favour of a holiday-time listing are:

  • There is less competition from other listings;
  • Those who are looking at properties during the holiday season are more likely to be serious buyers and not “browsers”;
  • Families looking for a new home have the opportunity to visit show homes together during the holidays;
  • Most of those relocating for work reasons do so at the end of the year, and they are generally keen to find a new home before their new job starts or before the new school terms starts for their children in January – especially if they have already sold their existing property in anticipation of the move;
  • Those who are buying property as an investment often wish to complete a purchase transaction before the end of the financial year in February for accounting or tax purposes.

So the message is clear: Don’t stop looking for listings now, even if it feels like the rest of the country is already on holiday. At the very least, your efforts will pay off in January when you already have stock to sell on your books and everyone else is just getting back to work and scrambling for listings.

And even better – and very likely – is that you will notch up some sales in the next six weeks and make the season extra festive for both the sellers and yourself.

Another reprieve for consumers

New Reserve Bank Governor Lesetja Kganyago announced today that thanks to lower demand for private sector credit, a sharp drop in oil prices that drove the inflation rate down to 5,9% at the end of October and weak economic growth, the Monetary Policy Committee had decided once again to leave interest rates unchanged.

He said it had been unanimously decided to keep the repo rate – which is the rate at which the Reserve Bank lends to commercial banks – at 5,75% and prime (as well as the variable home loan interest rate) at 9,25%.

As a result, the repayment on a 20-year home loan of R763 543 – which is the current national average approved bond amount – will remain at R6993 per month, according to SA’s leading mortgage origination group BetterBond Home Loans, while the repayment on the average home loan of R645 007 that is currently being approved for first-time buyers will stay at R5907 per month.

“In addition,” notes BetterBond CEO Shaun Rademeyer, “there will also be no increase for now in car instalments, credit card repayments or other debt commitments, and this will give households a further opportunity to lower their debt burden now if they spend carefully over the year-end holiday period, and put themselves in a much better financial position by next year.”

Meanwhile the stasis in interest rates, he says, will further boost consumer confidence in the residential property market (and not least because it speaks of better economic times to come) but it will probably not make much difference to sales numbers, or prices, until developers re-enter the market strongly and start delivering new stock.

“There is an acute shortage of residential stock for sale in popular areas currently, and lack of new development to take up the slack, which has caused house prices to rise faster than expected in recent months.

“And while there has been no slowdown in demand, these increases have made it more difficult for prospective buyers to qualify for home loans and finalise their purchases, with the result that price resistance is now becoming evident in many parts of the country.”

Nevertheless, Rademeyer notes, BetterBond’s latest statistics show that the percentage of home loan applications being declined outright dropped to 30% in the year to end-October, compared to 34% in the previous 12 months, while the percentage of applications declined by one bank but then “rescued” and approved by a different bank grew from 36,4% to 37,5% in the same period.

“This underlines the fact that the banks are even more willing to lend to homebuyers than they were at this time last year – provided that those buyers are in good shape financially. The unchanged interest rate is thus really good news for those who are trying to pay off their debts and increase the amount of discretionary income they have available to afford a home loan repayment.

“Of course it also helps enormously if their home loan applications are completed correctly and properly motivated, and this is why there is a distinct advantage in applying through a reputable originator like BetterBond, which is prepared to caretake individual applications and, if necessary, submit them to a second and sometimes even a third lender.”

Housing market steams ahead despite rate increases

This year’s interest rate increases have done very little to slow housing demand, and have had no negative effect at all on home prices, according to the latest statistics from BetterBond Home Loans, SA’s leading mortgage origination group.

These show, says CEO Shaun Rademeyer, that the average home purchase price increased 6,33% in the 12 months to end-October to R915 678, while the average purchase price for first-time buyers rose 4,76% to R645 007.

“And lending by the banks has kept pace with this growth. For a start, the percentage of purchase price required as a deposit has declined over the past 12 months by 3,53% on average – and by 2,41% in the case of first-time buyers – which makes it easier for buyers to save up the cash they need to complete home purchases.

“At the same time, the average approved bond size in our portfolio has increased by 7,11% to R763 543, and the average for first-time buyers has grown by 5% to reach R591 165.”

What is more, he says, the percentage of home loan applications being declined outright dropped to 30% in the year to end-October, compared to 34% in the previous 12 months, while the percentage of applications declined by one bank but then “rescued” and approved by a different bank grew from 36,4% to 37,5% in the same period.

“This underlines the fact that the banks are more willing to lend to qualified homebuyers than they were at this time last year – provided that applications are completed correctly and properly motivated. And this is why there is a distinct advantage in applying through a reputable originator like BetterBond, which is prepared to caretake individual applications and, if necessary, submit them to a second and sometimes even a third lender.”

As for demand, Rademeyer says, the BetterBond statistics show that the total number of home loan applications submitted to the banks has actually grown by 0,5% in the past 12 months – and that the actual number of approvals has increased by the same margin.

“There has, however, been a decline in the percentage of applications coming from first-time buyers, from 51,6% to 48,1% in the 12 months to end-October, which confirms that repeat homebuyers are currently the main driving force in the market.”

More income, less debt is good news for real estate

There’s good news for the world real estate market in the latest Global Wealth Report from German insurance group Allianz, which shows that the financial assets of private households in more than 50 countries have grown by almost 10% in the past year – the highest rate of growth since 2003.

What is more, the report says, this means that almost 500m people worldwide have entered the middle income category since 2000 – and are “managing to participate in global prosperity” rather than suffering the deprivations suggested by the latest global growth forecasts released by the World Bank.

And alongside the growth of assets, Allianz notes, there was also a growth  of around at 3,6% in household debt,  including mortgage debt, which shows that more homes are being bought as people’s financial situation improves.

Even more encouraging is the fact that the global debt ratio, that is personal liabilities measured as a percentage of nominal economic output, has fallen a total of 6,4 percentage points since 2009, to a current 65,1%.This means that consumers generally are in a better position to withstand financial shocks such as an increase in interest rates or a sudden fuel price hike – and thus less likely to lose the home they have bought.

But what is the situation in SA? Well, we know that more than 4m people have joined the “middle class” here in the past 20 years, and the latest figures from FNB suggest that the Household Debt-to-Disposable Income Ratio, which has dropped from 83% in 2009 to 73,5% currently, could go below 70% in the foreseeable future.

FNB Household and Property Sector Strategist John Loos explains that the overall rate of credit growth – particularly when it comes to unsecured loans – is slowing and  dropped to 3,64% in August this year, compared to 4,1% in July and a peak of 10,4% in November 2012.

At the same time, the household disposable income growth rate is heading for 7%, which together with lower debt is steadily improving many consumers’ ability to afford a home purchase. This is reflected in the fact that total mortgage loan lending is now growing at 3,46% a year, while other types of lending decline.

This is very encouraging for the local real estate industry, and bodes well for the continued slow recovery of the market, even if there are more interest rate increases next year.

Despite a higher-than-expected rise in consumer price inflation at the end of August to 6, 4% year-on-year, and the recent further decline in the rand exchange rate, Reserve Bank Governor Gill Marcus announced today that the Monetary Policy Committee has decided to leave interest rates as they are, at least until November.

Citing concerns about economic growth, which only rose 0,6% in the second quarter of this year after declining by 0,6% in the first quarter, Marcus said it had been decided to keep the repo rate at 5,75% and prime (as well as the variable home loan interest rate) at 9,25%.

As a result, the repayment on a 20-year home loan of R757 125 – the current national average approved bond amount – will remain at R6934, according to SA’s leading mortgage origination group BetterLife Home Loans, while the repayment on the average home loan of R586 705 that is currently being approved for first-time buyers will stay at R5373.

“In addition,” notes BetterLife Home Loans CEO Shaun Rademeyer, “there will be no increase for now in car instalments, credit card repayments or other debt commitments, and this will bring some relief to consumers who are battling to cope with considerably higher food, fuel and utility costs at this time.

“We do not, however, expect the stasis in interest rates to alter the slowdown in residential property market activity that has been taking place since the 25 percentage point interest rate increases that were announced in July. And the reason is the current shortage of residential stock for sale in popular areas and lack of new development to take up the slack, which has caused house prices to rise faster than expected.”

These price increases, he explains, make it more difficult for prospective buyers to qualify for home loans now, even if they are able to borrow at prime. “The average home price rose 8% in the 12 months to end-August, while the average salary or wage increase was only about 6%.

“At the same time, the higher cost of living as well as interest rate increases totalling 0, 75 percentage points since the beginning of the year have eaten into the ‘free’ income available to cover a home loan repayment.”

Consequently, Rademeyer says, the best course for prospective homebuyers now is still to try to save up bigger deposits before entering the market, as this will not only make it easier for them to qualify for a loan, but lower their monthly home loan instalments.

“In addition, they really should obtain pre-qualification for a home loan before they start looking for a property, so that they know what they can realistically afford, and be sure to apply for their loan through a reputable mortgage originator as this will give them a much better chance of securing an approval. At BetterLife Home Loans, for example, we obtained approved for more than 74% of all the loan applications we submitted in the 12 months to end-August.”

www.betterlife.co.za/homeloans

Although a large percentage of home sellers these days are empty-nesters planning to move from large family homes to smaller, lower maintenance properties, there are at least a dozen other reasons for homeowners to put their properties on the market, and agents looking for listings should check for a pattern in their own neighbourhood that will enable them to become a trusted expert.

“If you work in an area with a lot of sectional title apartments and townhouses, for example, there are bound to be a lot of young home sellers aiming to buy a bigger property or perhaps to move or emigrate quickly in order to take up a new job opportunity,” says Shaun Rademeyer, CEO of leading mortgage origination group BetterLife Home Loans.

“And if you become a specialist and build up a reputation for meeting their particular aspirations, you’re bound to get a lot of their business.”

Similarly, he says, the agent who works in a well-located older area should be able to build up a thriving business by matching up mature home sellers who don’t want to undertake major renovations with younger buyers specifically on the hunt for fixer-upper properties.

“Or you might perhaps have many young families in your area just dying to sell so that they can have more space, or be closer to good schools. It’s all about understanding what they want, presenting as the expert who can help them achieve those goals and of course, using your marketing and negotiating skills to deliver on your promises.”

Surveys among home sellers around the world have found that the most common reasons for selling are pretty similar everywhere, Rademeyer says, and apart from those noted above, these include:

  • Personal relationships. Moving in with a partner or getting married can mean one of the couple will need to sell, especially if both owned homes prior to the commitment. Alternatively, couples that are splitting up will often decide to sell the home they have owned together.
  • Area changes. Quiet, traditional suburbs can undergo a (noisy) change of character if they become popular with a new generation of homebuyers, for example, which may prompt many middle-aged owners to sell. Changes that make people want to move can also come about when new roads, shopping centres or housing complexes are built, or if a big local employer closes down or retrenches workers.
  • Moving closer to friends and family. People who have recently become single parents often want to move closer to a support network of parents, friends and extended family. Alternatively, grandparents may decide to move to see more of their children and grandchildren.
  • Owners who are well established in their careers often like to “move up” to bigger, more luxurious or better-located properties.
  • Change of lifestyle. An increasing number of city homeowners are selling these days in order to pursue a more leisurely lifestyle in smaller towns, for example, but there are also large numbers of people living in outer suburbs that want to move closer to urban centres and avoid long commutes.
  • One for two. A growing trend is for professional couples without children to sell a suburban home in order to buy both a very secure, low maintenance apartment close to work and a weekend getaway in their favourite holiday destination.
  • Many older people will sell their homes in order to move into a purpose-built retirement village that has all the security, amenities, health facilities and company they want.
  • Cashing in on equity. People who have lived in one home for a long time can suddenly decide that they have other priorities in life – such as travel, investment or qualifying for a new career – and they will sell so they can put some of the equity they have built up in their home towards realising their dreams.

www.betterlife.co.za/homeloans

Millennials all over the world have been much slower to enter the property market than their parents or grandparents were, but that doesn’t mean they don’t want to be homeowners, says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s leading mortgage origination group.

“And the demand is especially noticeable among this group in SA, where first-time buying still accounts for about 40% of all home purchases at the moment.”

One reason for this is that SA has a very “young” population, with more than a third of its people (38%) currently falling squarely into the 15 to 34-year-old millennial category and likely to fuel the residential property market for years to come as their finances and families grow, he says.

“Another is that SA has, since 1994, experienced a huge rise in the number of middle-class people for whom home ownership is a major aspiration – and who can afford to satisfy that aspiration at a much earlier age.”

However, to make sure that buying a home makes financial sense, millennials do need to know that they will be living there long enough (about five to seven years) to be able to recoup the “hidden costs” of their purchase, such as transfer duty and bond registration and legal fees.

In addition, Rademeyer says, they need to scrutinise their finances very carefully before buying in order to maximise their mortgage potential. “For example, they need to review their credit histories, reports and scores to get a sense of how attractive they are as borrowers, because this will have a huge influence on how easily they will be able to obtain a home loan; how much they will be able to borrow; how big a deposit they will need and what interest rate they will be charged.

“And the easiest way to do this is to seek the help of a reputable mortgage originator such as BetterLife Home Loans to get preapproved for a home loan.”

Other factors for millennials to consider before setting out to buy, he says, are:

  • The debt-to-income ratio (DTI) is a common term used in the mortgage industry that measures potential borrowers’ monthly obligations versus gross income, and most banks will be looking for a level below 36%. If it is higher, the borrower will need to reduce debt, increase income or consider buying a cheaper home.
  • Lenders want to see that borrowers can sustain homeownership and have the income to support the bond repayments, which is why they generally ask for pay slips and tax returns for at least two years to establish an income “history”. If your income is too low for the loan you have in mind, you will need to get rid of debt to become a more attractive borrower, and try to save a bigger deposit.
  • The deposit. Although the BetterLife Home Loans statistics show that the average deposit required by first-time buyers is currently only 11% of purchase price, the bigger the amount you can put down the better, as it will enable you to secure a better interest rate on your home loan, pay off your home faster and save many thousands of rands in the long run.
  • The costs related to home ownership definitely don’t end when you move in and since some of them may be quite unexpected for new buyers it is recommended that they have at least six months’ of living expenses in savings before signing an offer to purchase.

www.betterlife.co.za/homeloans

BetterRewards Dream Bigger, Live Better Lottery

Here at BetterBond, we believe in not simply thanking our loyal supporters, but taking things a step further by rewarding them too. The BetterRewards Dream Bigger, Live Better Lottery is our way of doing just that. The loyalty consistently shown by our developers, principals and agents is very much appreciated and that’s why we’ve decided to help them make their dreams come true. Read on to find out all you need to know about this fantastic rewards system.

How do I enter?

It’s really simple actually: Call 011 5165500 or contact a knowledgeable consultant at BetterBond who will assist you in becoming a BetterRewards Member. You will then receive a unique password which you will use, in conjunction with you South African ID number, to log in into the lottery. You can then start submitting!

What can I win?

Each month, you stand the chance of winning your share of R100 000, which will go towards turning your biggest dream into reality. Winners are chosen via a lucky draw, but there are also many rewards in multiple categories up for grabs designed to suit your everyday needs.

BetterRewards App

We live in a technological age and BetterBond strives to move with the times. That’s where the BetterRewards App comes in. Members are able to log in using the same credentials they would use when logging in through the web portal and can view their points balance, along with their BetterRewards MasterCard balance. It’s also a quick and easy way to redeem points. This app is all about making your life easier.

For Estate Agents

BetterRewards offers estate agents a special multi-tiered rewards programme whereby points are used as currency for each home loan that is secured and successfully submitted to BetterBond. The more bonds you secure, the higher up you move through the different tiers. Points earned can then be “burned” on everything from movie tickets to travel and airtime.

The BetterRewards Dream Bigger, Live Better Lottery is our way of saying thank you to those who continue to support us. Remember: the more dreams you submit, the greater your chances of winning. So, take the first step to making your dreams come true with BetterBond today.

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