This emphasis on home is not only making many people dream about buying their own, but it is also making it possible for many first-home buyers to apply for a bond that will allow them to make this dream come true.

“The South African Reserve Bank's decision to hold the repo rate steady at 3.5%, keeping the prime lending rate at 7%, means that aspirant homebuyers who watched last year as their friends and family made the most of the historic-low interest rate, still have an opportunity to do the same in 2021,” says Carl Coetzee, CEO of BetterBond. “While a repo rate drop to kickstart this year would have been welcomed, the five consecutive repo rate cuts of 2020 have already laid the groundwork for a strong recovery in the housing property market.”

As a result, it is now cheaper to buy a property than it is to rent one of the same value, says Coetzee. “The average monthly rental on a R1 million property is about R7 800. At a prime lending rate of 7%, the monthly bond repayment on the same property would be comparatively less at R7 753.” Of course, there are additional costs associated with owning a house, but there is also the benefit of having a fixed asset instead of paying off someone else’s bond each month. Says Coetzee: “This shift in affordability has been particularly beneficial for first-home buyers and, for the latter part of 2020, first-home buyers account for 70% of BetterBond’s bond application volumes.”

“Buying a new home is one of the most important and significant purchases a person will make. So, it’s important to start the home-buying process with a realistic understanding of the amount needed to secure the required bond,” says Coetzee. As part of their service, at no cost to the client, BetterBond applies to multiple banks (including the client’s own bank) and negotiates the best interest rate on the buyer’s behalf. The banks pay BetterBond a once-off commission to broker the deal on their behalf, which means that the homebuyer is not charged anything for this service.

The following table illustrates how, by approaching more than one bank, BetterBond is able to negotiate a lower interest rate of on average 0.61% for their clients; the difference between the best and the highest rate offered by the banks. The more banks approached, the more favourable the outcome as the banks compete to offer the best rate. For example a client who qualified for a prime interest rate of 7% on a R1 million bond, and was offered a further reduction of 0.61%, could end up saving almost R400 on monthly bond repayments and, over 20 years, close to R87 000.

“Buying a home for the first time can be stressful, and having a bond agent helping you is one of the most powerful tools you will use in your search and your ultimate acquisition of a home. It gives many first-home – and other – potential homeowners enormous peace of mind,” concludes Coetzee, “especially if they are making the switch from renting to owning.”