Banks Still Require Home Loan Deposits

May 7 - Absa Home Loans, which offers up to a third of the housing financing South Africa. says that potential homeowners will need to start saving for deposits if they want to buy a property.

Despite the fact that some banks are offering 100% home loans, the average loan still requires a deposit, usually 15% of the value of the property.

Those wishing to buy a home costing R700,000 (the price of the average home) will thus need to save R100,000 before they can apply for a loan.

Banks have come out of the recession with the feeling that their policy of cautiousness paid off, and they are keen to continue along these lines.

According to Luthando Vutula who heads Absa Home Loans, this careful strategy will help increase the savings culture in Sout Africa .

The demand for a deposit on a home loan application will also affect the price of property. While prices will not weaken as a result, it still means that there will not be a significant increase for the rest of the year at least.

Nevertheless, the fact that home loans are being approved - despite the need for deposits - should be a good sign for those seeking a mortgage.

Absa said that its approval rate is around 70%, while the national average is approximately 50% of all applications being approved.

Related Insurance Articles:
* Buyers Advised on Home Loan Procedures
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* Low Demand for Buy to Let Property
* Growth in South African House Market

5/7/2010 11:16:11 AM