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ooba records highest volume of home loan applications in 13 years

‘The market that’s really pushing ahead is probably more the bottom to middle end,’ notes CEO Rhys Dyer.

DUDU RAMELA: Residential property sales have skyrocketed after the reopening of the market during lockdown Level 3. ooba Home Loans recorded its highest volume of home loan applications in 13 years. We speak now to Rhys Dyer, ooba CEO. A very good evening to you, Rhys. Thank you so much for joining us. What is driving this?

RHYS DYER: Thank you. A couple of things, Dudu. Primarily the low interest rates. As you know, interest rates are down at 7%, the lowest we’ve had in over 50 years. So that’s the primary driver. But also banks are lending quite strongly in the market at the moment. I think those two factors combined are really what’s driving the growth

DUDU RAMELA: And you’ve done some research which revealed the average age of the people buying property.

RHYS DYER:

Yes. We are definitely seeing a slightly younger age entering the market, which is extremely positive.

So far, first-time home buyers’ average age is now about 34 years, and for across our entire population at about 37 years – about a year younger than what you’ve seen in the prior year. So I think the low interest rates are definitely encouraging more first-time buyers and more younger buyers to get into the property market.

DUDU RAMELA: What are we seeing when it comes to buyers wanting to get a 100% bond?

RHYS DYER: I think it is a function more of the first-time home buyers looking for property in the market at the moment. The vast majority of those first-time home buyers don’t have access to a deposit, so are asking banks to approve their loans at 100% of the price of the property.

And we’re seeing a significant jump up in customers looking for a 100% bond. I think about 64% of our applicants at the moment are asking for a 100% loan. Importantly, we are managing to get over 80% of those applications approved by banks. So definitely a nice market for first-time home buyers to enter the market and get a 100% bond.

DUDU RAMELA: One would have thought that, with everything that is going on with Covid-19, it would not be such a lucrative time for people to even be looking for homes.

RHYS DYER: Yes, it does seem somewhat counter-cyclical to what we’re seeing in the market – obviously with the job losses and businesses closing. I do think that the bank lending that we’re seeing, while it may look concerning in relation to potentially what may come – bad debts and the like – if we look back over the past 10 or 15 years, it’s not significantly different to from what we’ve seen in the past, certainly in relation to what we saw in 2005/6/7 before the property bubble. So we are still comfortable that the current level of lending from banks is sustainable, certainly into next year.

DUDU RAMELA: What is the future of the property market in South Africa?

RHYS DYER: It is very much a tale of different home sizes at the moment, Dudu.

The market that’s really pushing ahead is probably more the bottom to middle end. So I’d say the R500 000 to R1.5 million price range is where we are seeing the vast majority of the activity.

And I think there we will continue to see strong demand driven by good bank lending and low interest rates. And you’ll probably see, as a result, prices starting to pick up there and potentially some stock shortages in that space. And that probably does extend even a little bit higher up, to sort of the R2 to R3.5 million. But at the very top end of the market, if we’re talking R5, R6, R7 million and above, we are still seeing quite slow growth, sellers having to drop their asking prices by 10 to 15% to get a sale; and properties are on the market for a while. So very much dependent on where your property is as to what your market dynamics are at the moment.

DUDU RAMELA:. Thank you very much for your time this evening. Reese Dyer is ooba CEO.

COMMENTS   1

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This will no doubt have an impact on growth and positivity in South Africa.

Well done First time home buyers. May God bless South Africa always. It’s a huge vote of confidence in our economy. New people buy fixed assets is always a great thing.

End of comments.

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