Home loan moans

Tue, 08 Jul 2008

Half of all home loan applications were rejected by SA banks in June, bond originator ooba (formerly MortgageSA) said on Monday.

Data showed that 50.1 percent of all home loan applications were turned down by banks in June 2008, up from 40.3 percent of applications in June 2007, ooba said.

"However, when an application is rejected by one bank it is often approved by another.

"ooba's stats show that more than a third of all the home loan applications declined by one bank in June 2008 are approved by the other banks it sends the application to," said Saul Geffen, chief executive of ooba.

ooba also experienced large variances in the interest rate concessions given between the banks, even on the same home loan application, Geffen said.

"Just a 0.5 percent difference is significant, and getting the wrong rate can mean adding a huge amount to the total cost of the loan and your monthly repayments," he added.

He advised buyers – and especially first time buyers – to shop around and secure home loan approval at the best interest rate.

Banks have also made things tougher for buyers by tightening their lending criteria, Geffen said.

Currently only FNB and Nedbank were still granting some 100 percent loans with other banks requiring deposits of between 10 and 20 percent.