There is mounting evidence that even South Africa is not immune to the current credit crisis that is affecting the entire globe. It should be mentioned first that home prices are continually dropping. Statistics that were releases by bond originator ooba state that the home prices have fallen 6.6 percent overall compared to last October. Broken down into simple terms, it basically means that a house that is sold last year would have brought R803,908, would only bring in R751,118 in October of this year.

Banks are being cautious in light of the credit crisis, the National Credit Act and deteriorating economic outlook. Though the rate of home loan declines were down slightly, 1.4 percent, it doesn’t really dent last month’s rate of 51 percent.The second indication of the poor property market is that potential homeowners are finding it increasingly difficult to get financing for their properties.

In the third quarter of this year alone, the number of loans more than two months behind rose 21.5%.Another reason for banks to tighten their lending is the rising number of homeowners who are late on their installments.

What is a potential homeowner to do in this market? It is important to note that decline rates vary from one bank to another, so take the time to try applying with other banks before you give up completely.

Obtaining a home loan is not what it used to be. Simply having a steady job will not qualify you. It is essential that you have a positive credit rating. Lenders require that an applicant be able to prove their ability to make the required payments. Be sure that you have not defaulted on any other payments in the previous two years before submitting an application for a home loan.

Lenders are looking for stability in their borrowers, as evidenced through a good record of paying of credit card debt. A history that shows you have already successfully managed a home loan will also go a long way with lenders.

If your history is not stellar, it is best to be honest. Lenders appreciate a borrower who is upfront about a rough spot in his credit history instead of trying to cover it up. Also, show that you are serious about your financial obligations by opening savings account for the express purpose of building a home deposit fund. The average deposit requirement is 10 percent, but this can vary from bank to bank, so do your research.

The maximum your monthly installment should be is 30% of your total income, and it is better if it is less. Banks won’t give you a second look if you don’t meet this prerequisite.

All in all, today’s property market is fraught with frustration. On the one hand, sellers are having a difficult time finding buyers and are being forced to accept lower offers, which is great news for buyers. On the other hand, potential buyers are struggling to secure financing.

If you are thinking of purchasing a home,it is very much worth your time to explore each avenue to receive a home loan as long as you are able to afford the payments and you have a job stable enough to allow the commitment.

Tom Martens is the content coordinator for South Arica’s leading Home-loans portal which amongst others offers origination services for ABSA homeloans