The news highlights the increasing trend of homebuyers prioritizing deposits for significant savings and increased affordability. Data from ooba Home Loans reveals that the average deposit size has grown from 7.5% to 8.4% in the second quarter of 2023. Buyers are utilizing deposits to minimize the impact of rising interest rates and secure more affordable properties. First-time buyers, in particular, are recognizing the power of upfront payments, with deposits accounting for 9.6% of the purchase price on average, a 15.2% increase year-on-year. Making a deposit can result in substantial monthly savings and significant differences in the total amount paid back over a 20-year term.
Unique News Report: In the dynamic world of real estate, a game-changing trend is emerging, reshaping the landscape of homebuying. Buyers are unlocking the power of deposits, and it’s proving to be the key to incredible savings and increased affordability. According to the latest data from ooba Home Loans, the average deposit size has surged from 7.5% to an impressive 8.4% in the second quarter of 2023.
Why the shift towards deposits? Chief executive Rhys Dyer sheds light on this phenomenon, explaining that buyers are strategically countering rising interest rates by reducing their loan exposure through deposits. This savvy move empowers them to secure more manageable property deals, ensuring long-term financial stability.
First-time buyers, in particular, are embracing the deposit advantage. In a bold move, they are allocating an average of 9.6% of the purchase price as upfront payments. This substantial increase of 15.2% year-on-year demonstrates the growing realization of the potential benefits.
Let’s delve into the numbers: For an average property purchase price of R1,426,656 at the current interest rate of 11.75%, buyers without a deposit face a monthly bond repayment of approximately R15,461. However, those who smartly contribute a deposit of 8.4% (equating to around R119,839) witness their monthly repayment decrease significantly to R14,162, saving a remarkable R1,299 each month.
The impact of deposits amplifies over time. Over a 20-year term, buyers with a deposit of R119,839 will repay a total of R3,399m, while those without a deposit will eventually pay back a hefty R3,711m. The difference of R312,000 is a testament to the undeniable financial wisdom of prioritizing deposits.
For first-time buyers, the numbers are equally impressive. With an average purchase price of R1,120,173, those without a deposit will face a monthly repayment of around R12,139. However, by contributing the average first-time buyer deposit of 9.6% (approximately R107,537), their monthly repayment drops to a more manageable R10,974, resulting in a monthly saving of R1,165.
Looking ahead, the future of homebuying appears to be defined by the strategic deployment of deposits. As aspiring homeowners embrace this powerful approach, their journey to owning a property becomes not only more accessible but also financially savvy. The numbers don’t lie, and the evidence is clear – the key to unlocking a brighter, more affordable future lies in the power of deposits.