First Time Home Buyers on the Increase

Despite record-high interest rates, Standard Bank has noted a resurgence in first-time homebuyer activity in South Africa, potentially driven by expectations of imminent interest rate cuts.

In May, nearly 50% of home loans registered by Standard Bank were taken by first-time buyers. This included all approved home loans where at least one applicant was purchasing their first home. The volume of applications from first-time buyers also increased in April and May following a notable decline in the last months of 2023 into 2024.

Standard Bank’s data indicates a recovery in the first-time homebuyers’ market since the first quarter, when the ooba Home Loans’ oobarometer indicated that the proportion of applications from these buyers had dropped to a low of 46%.

“It is encouraging to see a growing proportion of first-time buyers in our book. As the leading lender for first-time homebuyers, we have maintained a steady risk appetite to ensure ongoing support for aspirant homeowners. The rise in applications and loans directed towards first-time buyers shows the market’s recognition and appreciation of our commitment,” says the Head of Standard Bank Home Services, Toni Anderson.

Standard Bank offers home loans of more than 100% of the purchase price to first-time homebuyers that qualify. This is done to help them cover upfront costs like bond registration and transfer fees. For clients that needed assistance with upfront costs, the average loan-to-value – which indicates the approved home loan relative to the purchase price – increased in the latter part of 2023.

“That’s because at Standard Bank first-time buyers now qualify for up to 108% subject to risk assessments offers. This also shows that first-time buyers need more help to cover upfront costs,” says Anderson.

Below are other notable trends Standard Bank recorded from first-time homebuyers:

• 48% of all bond registrations by Standard Bank in the past five years involved first-time buyers.
• In the past year, Standard Bank approved an average of 50% of all applications it received from first-time homebuyers.
• The average loan value approved for all first-time buyers in the past three years stood at R975,000.
• Four in ten first-time buyers had a deposit.
• The average deposit was 24% of the selling price.
• Gauteng, Western Cape and KwaZulu Natal represent the top three provinces for first-time buyer activity.

“The past three years have been challenging for homeowners. At Standard Bank, we wanted to be there for our customers. As the largest financier of first-time buyers and housing in South Africa, we promptly implemented support measures for our home loan customers,” says Anderson.

Over and above these home loan support measures; Standard Bank has helped several first-time buyers settle or reduce their mortgages in the past two years. The bank launched a first-time homebuyers’ competition in 2023 and six winners have had their mortgages settled in full and three more are left with balances of less than R200,000.

“Standard Bank remains committed to ensuring that more consumers can realise their homeownership dreams. Supporting first-time homeowners reflects our ongoing commitment to empower and enable more aspiring homeowners,” concludes Anderson.