BetterNews //September2013
Helping to make people’s
dreams come true www.betterbond.co.za
3 BetterGroup announces name change
7 How to get with the millennial groove
After 13 years, we are changing our name to
Keeping up to date with the trends and
reflect our company’s mission.
expectations of future clients.
5 First-time buyers back in force
11 International news: First-time buyer crisis looms for UK
First-time buyers are on the rise despite the
Young adults are struggling to move out of
increase in the cost of living.
home with the increase in property prices.
We are an authorised financial services provider (license number: 24015). Nedgroup Life Assurance Company Limited administers BetterSure. P olicies are underwritten by Old Mutual Alternative Risk Transfer Limited, an authorised financial services provider. BetterSure and BetterQuote are part of the BetterBond group.
BetterGroup announces name change From now on moving forward the BetterGroup will be known as the BetterLife Group – having changed its name to more accurately reflect its core purpose in providing a range of consumer financial solutions.
Our aim, quite simply, is to help people make their dreams come true... says group CEO Rudi Botha, “by providing financial services and products that empower them and improve their lives”. “That focus is clearly reflected in our new name – and will be further enhanced by our new; consolidated social responsibility programme.” The group, he explains, has always believed in giving back to the communities from which it draws business, and has supported many good causes over the years, “but the new programme will give these efforts new direction and sustainability”. A percentage of the value of every product or service sold by the BetterLife Group will now be allocated to a dedicated social responsibility fund, which will be used to support specific organisations that are working to give less fortunate people a better life. “This decision has been taken,” Botha says, “because in addition to putting passion into our own business and treating our clients with integrity, we feel this is the best way to demonstrate that we are a group that cares deeply about others.”
3
First-time buyers back in force
Sentiment in the residential property market continues to improve and drive up the demand for home ownership, even in the face of rising living expenses and slow economic growth that is keeping the lid on salary and wage increases. That’s the word from Shaun Rademeyer, CEO of SA’s biggest mortgage originator BetterBond HomeLoans, who says the clearest indication of growing consumer confidence in the market now is the steady increase in the percentage of home loan applications coming from first-time homebuyers. “Such buyers are usually the first to ‘opt out’ of the market when purchase conditions become unfavourable - by staying on with their parents or continuing to rent - but our statistics show that first-time buyer interest has recovered strongly since March, thanks largely to a drop in the deposit requirements for such buyers and an increase in the percentage of loans being granted for 100% of the property purchase price.” Affordability has also been increased, he notes, by the fact that the average home price for firsttime buyers has also shown little movement in the past 12 months. (See table). BetterBond HomeLoan statistics, which cover a quarter of all residential mortgage bonds being registered in the Deeds Office and include applications to, and bond grants from, all the major lending banks in SA, show that applications from first-time buyers accounted for 44% of the total number in the three months to end-August, compared to 37% in the previous three months. They also show that the percentage of 100% home loans approved rose to 36,2% in August compared to 30,4% of the total in August 2012, and that the average percentage of the property
purchase price, required as a deposit by first-time buyers who do not secure 100% home loans now stands at 8,8% - compared to 13% a year ago. Meanwhile, BetterBond HomeLoans continues to achieve approval for close to three out of every four applications it receives (73%), and thanks to our depth of knowledge in the process of applying for a bond coupled with the ability to submit to other banks should the applicants own bank not provide the best deal. “Indeed,” Rademeyer says, “the statistics show that over the past year, 55% of applications only succeeded on submission to a second or third lender – so prospective borrowers really do have a much better chance of obtaining a home loan when they apply through BetterBond as we can approach all banks on their behalf”. “In addition, the average approved bond amount achieved by BetterBond is now 8,4% higher than it was a year ago at R788 018 – which is also the highest level in two years.”
Aug ‘11
Aug ‘12
% change YOY
Aug ‘13
% change YOY
Average purchase price
R787 151
R960 350
Average deposit required
17,3
31,8
Average firsttime price
R569 218
R629 975
Average firsttime deposit
8
13
Average borrower income
R42 831
R45 315
5,8
R42 578
-6
Average first-time income
R25 213
R30 510
21
R30 477
0,1
% of total applications declined by one bank, approved by another
28
36
37
BetterBond overall approval percentage
63
63
73
22
R935 076
-2,6
17,1
10,7
R652 178
3,5
8,8
How to get with the millennial groove Everyone in the real estate industry knows that today’s young buyers are nothing like their predecessors. As the US National Association of Realtors (NAR) notes, they are tech savvy, always on the go, and often single.
But they also have very different – and definite – expectations when it comes to buying a home and, since they are the future of the market, estate agents need to get to grips with these sooner rather than later. For example, where “green” home options used to be a bonus for homebuyers, they are considered a housing staple by the Millennials - a blanket term that includes Gen Y and Echo Boomer buyers – who regard it as normal behaviour to try to reduce one’s carbon footprint as well as the utility bills. Consequently, they will be expecting to see insulation, energy-efficient windows and appliances, solar panels, heat pumps and natural or recycled building materials when they view homes for sale. Other things on their wish list when searching for their ideal home include: •
Integrated technology. Two-thirds of Millennials recently surveyed said they wouldn’t
live in a home that wasn’t tech-friendly, with smart-phone controlled temperature,
sound and security, and many are also interested in luxury home tech such as
home theatres.
•
Flexible space use options – like an extra bedroom that they can use as a
recreation room, a games room, a home gym or a home office. They don’t want to have
to move too often as their lifestyle needs evolve.
•
Smaller, lower maintenance homes, preferably without stairs, and open plan living areas
that are all easily serviced by the kitchen.
•
Homes that are move-in ready. Millennial buyers would rather pay more for a home that
they don’t have to work on than a fixer-upper.
8
International news:
First-time buyer crisis looms for UK A new report from the National Housing Federation (NHF) in the UK says first-time homebuyer prices are set to see a whopping 42% increase between now and 2020 – mostly because of the country’s 10-year-old homebuilding backlog.
Quoted on the National Association of Estate Agents (NAEA) website, the report also says that this will force an estimated 3,7-million young people to continue living with their parents because they are unable to afford homes of their own. House prices will go from being 10 times the average young person’s annual wage to 16 times the average wage, and NHF director Ruth Davison says this will steadily worsen the current situation in which even those young people with decent jobs are struggling to raise a mortgage deposit or pay their rent. Meanwhile, another piece of research, by Family Investments, has found that almost a quarter of parents would be willing to help their children get on to the housing ladder by acting as guarantor – and that two-thirds would be willing to give their children money outright for a first-time home purchase.
It’s obviously becoming increasingly difficult for young adults to get on to the property ladder says Kate Moore, head of savings and investments at Family Investments, “and as it becomes harder for them to save enough for a deposit on their first home, parents are having to consider other ways of supporting their children into the future.” What is worrying, though, is that this new trend of parents funding their children’s home purchases often includes parents remortgaging their own homes - and thus putting their own equity and financial future at stake. Currently, 46% of home purchase loans in the UK are being made to first-time buyers, with London alone accounting for 11 200 first-time buyer loans in the second quarter of this year, according to the Council of Mortgage Lenders. At the same time, GBP2,4bn was advanced to borrowers who were remortgaging their houses, which was a 31% increase compared to the first quarter of the year, and an increase of 14% compared to the second quarter of 2012. *In SA, according to the latest statistics from BetterBond HomeLoans, first-time buyers accounted for 41% of home loan applications in the 12 months to end-July this year, and the average home price for such buyers rose some 7% in that time. But loan advances to those re-mortgaging their homes still only amounts to between 2 and 2,5% of the total, so it would appear that young buyers are either having to make the purchase on their own or they are obtaining financial assistance from their parents.
10
Spoken from the heart
Compliment for Jaqui Fourie & Marietjie Parkin Kindly accept my gratitude for the effort you put in, in order to get this application through. If it was not for your motivation and willingness to go the extra mile, this bond would never have been approved. I just really wanted to express my sincere thanks. Compliment for Pariksha Moodley Wow, compliment on your good service for helping us to get the bond that we were looking for. Thank you and God bless you with all your team at betterbond. Compliment for Rene Nelson Theo and I want to thank RenÊ and her team for taking our application serious and supporting us right through the process. They are a great team and all their hard work and dedication are appreciated! Compliment for Doriette Steyn We had a family crisis in which my mother’s house was in the process of being repossessed. By the time my sister and I found out, the house was a week away from auction. In order to save the house we needed an approved grant from a bank in less than a week. BetterBond assisted us with a complete understanding of the urgency of the matter. Within less than 3 working days we had a grant from 3 banks and we were able to stop the action. My sincere thanks to Doriette and Marieta for you outstanding help regarding this very sensitive matter and the gracious professionalism you handled it with. We’ll always be grateful!
Did you know that more than 30% of all new homeowners called 0860DREAMS? And when they did, the response was: “Hello, how can we at BetterBond help put you into your dream home?” As the biggest home loan finance originator in South Africa, we achieve more success for more new homeowners than anyone else. Hardly surprising. We have 13 years experience in the business, relationships with 6 major banks and associations with almost all leading estate agents. If you’ve met any of our consultants, you’ll know that “never say never” isn’t a James Bond title, it’s a way of life. So if you’re looking to finance your dream home, look no further. You’ll see that we deal in promises and not in fairytales.
Call us today and don’t just get a home loan – get a better bond.
Call 0800 007 111 or visit www.betterbond.co.za
A Member of the BetterLife Group
www.betterbond.co.za