ooba Continues to Record Growth

The latest statistics from ooba, South Africa’s biggest bond originator, show that the average house purchase price has increased 4.5% year on year and 0.5% month on month to R908,802. This is further confirmation in the trend of improving nominal house prices recorded by ooba in recent months.

“ooba has recorded steady albeit single-digit nominal house price growth since the beginning of the year,” says Saul Geffen, ooba CEO. “At the same time, there is an increased percentage of first-time buyers, which has remained a high proportion of total buyers since May 2011.”

Of all ooba’s applications in April, 52% were from first-time buyers, up 1.1% year on year, and 0.2% month on month. The first-time buyers’ average house price is showing a slight increase year on year of 0.1% to R677,712.

ooba also set a new company record in April. The overall value of home loan applications received and processed by ooba in April was 50% higher year-on-year, while the value of approved home loans was 30.5% higher year on year, resulting in ooba’s best performance in five years.

Geffen attributes this considerable growth to ooba having doubled its market share, as well as to increases in the number of applications received, higher property prices, lower deposit requirements and increased home loan approval rates.

For the past six-month period, ooba’s approved home loans value was up 28.5% compared to the same period the prior year. The value of approved home loans in April was 317% higher than January 2009, ooba’s lowest month during the property and financial crisis.

A number of positive changes have conspired simultaneously to drive ooba’s volumes significantly higher,” says Geffen. “There also seems to also be a strengthening in the property market, with the increased confidence filtering into increased volumes.”

ooba’s average approved bond size, at R761,259, is showing an increase year on year of 3.8%. The average bond size for first time home buyers is R601,040, and has increased by 5.4% since December 2012. 

The average deposit in April was at 16.2% of the average house price.

“We advise applicants to save for a deposit, as these loans achieve higher approval rates and better terms”, says Geffen.

The initial bank decline ratio of 46.0% is 0.9% higher year on year, but slightly lower month on month by 0.5%, and the ratio of applications declined by one lender and then granted by another is showing a slight year-on-year and month-on-month decrease of 1.8% and 3% respectively to 24.9%.

ooba’s effective approval rate, which is the overall percentage of loans approved once ooba has shopped the loan to multiple banks, was 65.5% in May. ooba’s trailing effective approval rate, which takes into account loans approved after month-end is running at 72.5%.   

“ooba continues to achieve the highest approval rates in the industry. We secure approvals for 72% of all the home loan applications we receive, which compares very favourably with the overall average bank approval rate of 54% across the major lenders,” says Geffen. “This essentially means that homebuyers have on average a 34% better chance of getting their home loan approved when using ooba.

Full oobarometer analysis:

Indicator

Apr

2013

Apr

2012

Change yr on yr

(Apr 13 vs Apr 12)

Mar

2013

Change month

on month

(Apr 13 to Mar 13)

Avg purchase price

908,802

870,070

4.5%

903,922

0.5%

Avg purchase price

of  first time buyer

677,712

676,837

0.1%

690,474

-1.8%

Avg approved bond size

761,259

732,763

3.8%

782,986

-2.8%

 

Avg deposit (as % of purchase price)

 

16.2%

(R147,543)

15.8%

(R137,307)

2.5%

13.4%

(R120,936)

20.9%

Avg age of applicant

37

37

No Change

37

No Change

Avg initial decline ratio

(first bank decline)

46.0%

45.1%

0.9%

46.5%

-0.5%

 

Ratio of applications declined by one lender but approved by another

 

24.9%

26.7%

-1.8%

27.9%

-3.0%

Effective approval ratio

65.5%

66.9%

-1.4%

66.5%

-1.0%