By: Lonwabo Mtyeku | Photo Credit: Supplied
Seen Here: Bradd Bendall, National Head of Sales at BetterBond, says that while higher deposit requirements are reshaping South Africa’s home loan landscape, informed financial planning, disciplined saving and expert guidance continue to make home ownership an achievable goal for aspiring property buyers. Photo Credit: Supplied
Johannesburg, South Africa — South Africa’s residential property market continues to show remarkable resilience, but aspiring homeowners are facing a new challenge as banks tighten lending criteria and require larger deposits from buyers.
Although lower interest rates have improved affordability in recent months, stricter lending practices are changing the path to homeownership, requiring prospective buyers to save more before qualifying for a home loan.
According to BetterBond’s latest Property Brief, the average deposit required by banks during the second quarter of 2026 was 21% higher than a year earlier, reflecting a more cautious lending environment as financial institutions navigate ongoing economic uncertainty and inflationary pressures.
At the same time, the housing market continues to gather momentum. Residential property prices remain on an upward trajectory, with annual house price growth reaching 8.6% across all buyers and 9% among first-time buyers—well above the current inflation rate.
The average purchase price has now climbed above R1.7 million for all buyers, while first-time buyers are paying an average of R1.4 million for their first homes.
Banks Tighten Risk Assessment
Despite reporting strong financial performance and healthier loan books, South Africa’s major banks are adopting a more conservative approach to new mortgage lending.
Rather than restricting access to finance entirely, lenders are placing greater emphasis on risk management by encouraging buyers to contribute larger deposits and demonstrate stronger financial profiles before approving home loans.
Financial experts say this strategy is designed to protect both lenders and borrowers in an uncertain economic environment while maintaining the overall stability of the housing market.
When assessing applications, banks continue to evaluate a range of factors, including affordability, employment stability, credit history, debt levels and the size of the buyer’s deposit.
Applicants who present a stronger financial profile are generally more likely to secure bond approval and may also qualify for more favourable interest rates.
Deposits Becoming the New Barrier
For many aspiring homeowners, particularly first-time buyers, saving for a deposit is increasingly becoming the biggest obstacle to entering the property market.
BetterBond recommends buyers aim for a minimum deposit of 10% of the property’s purchase price when applying for a home loan.
On a R1.4 million property, that translates to approximately R140,000. With deposit requirements for first-time buyers increasing by 7.3% over the past year, prospective homeowners may now need to save more than R150,000 before submitting a bond application.
While the increase may appear modest, it represents an additional financial hurdle for households already managing rising living costs and inflationary pressures.
The Benefits of a Larger Deposit
Although higher deposit requirements present short-term challenges, property experts argue they can deliver meaningful long-term financial benefits.
A larger upfront contribution reduces the amount borrowed, lowering monthly bond repayments and decreasing the total interest paid over the life of the loan.
Equally important, buyers who contribute larger deposits are viewed as lower-risk borrowers, improving their chances of approval while potentially unlocking more competitive lending rates.
This can significantly reduce the overall cost of homeownership over time.
Expert Guidance Becoming More Valuable
In a more selective lending environment, financial preparation has never been more important.
Prospective buyers are encouraged to evaluate affordability carefully before beginning their property search and ensure monthly bond repayments remain comfortably within their financial means.
Industry experts generally recommend that housing costs should not exceed 30% of gross monthly income, helping households maintain financial stability after purchasing a home.
Bond originators are also playing an increasingly important role by submitting applications to multiple lenders simultaneously.
Because banks assess risk differently, one institution may require a sizeable deposit while another could approve the same applicant for a higher loan amount or even offer a 100% home loan, depending on the individual’s financial profile.
Comparing multiple lending offers can therefore improve both approval prospects and financing terms.
A Market That Continues to Show Resilience
Despite tighter lending standards, South Africa’s housing market continues to demonstrate encouraging signs of strength.
Home loan applications have increased significantly compared with the post-pandemic period and have continued to recover following the interest rate hiking cycle that began in late 2021.
This sustained demand suggests that confidence in residential property remains strong, supported by improving affordability, stable banking institutions and continued demand for homeownership.
While buyers may need to save more and prepare more carefully than in previous years, the dream of owning a home remains firmly within reach.
For many South Africans, success in today’s property market will depend not only on finding the right home but also on building the financial resilience needed to secure it.
As lending conditions evolve, careful planning, disciplined saving and informed financial advice are becoming just as important as location and price in achieving long-term homeownership.
