More than half of loan applications are still being declined despite many banks relaxing their credit criteria, according to mortgage originator ooba. The slight improvement in the residential property market from the second half of last year is largely due to the relaxation of credit criteria by banks and the reduction in interest rates.

However, according to Saul Geffen CEO of ooba, many would-be homeowners will be left disappointed, as banks remain reluctant to grant the full amounts applied for. "While the granting of 100% home loans is a sign of confidence in the local property market the reality is that the implications of the National Credit Act mean that consumers still have to meet the strict affordability criteria in order to qualify."

The ooba statistics show that the proportion of consumers applying for 100% bonds has jumped to 44% of overall applications in December 2009, up from 18% three months earlier. However, the approval rate on these applications are significantly lower, and nearly half of the bank approvals on these 100% bond applications are made subject to deposits.

source: www.ooba.co.za