Factors influencing access to Real Estate Finance in Bloemfontein

Abstract

Accessing real estate finance is crucial for homeownership, yet navigating the complexities of the mortgage lending landscape remains challenging. This qualitative study explores the various factors influencing the success of home loan applications in Bloemfontein, South Africa. Through in-depth interviews with industry experts and a thorough review of existing literature, this research identifies key determinants affecting borrowers’ ability to secure mortgage financing.

The study reveals that borrower-bank relationships play a critical role, with existing clients often receiving preferential rates. However, leveraging mortgage originators can lead to better deals by harnessing competition among multiple banks. Property characteristics, including type and location, significantly influence loan approval and pricing, with banks exercising caution in funding properties in high-risk areas or certain property types. Additionally, borrower education programmes are recognised as vital tools in enhancing financial literacy and empowering prospective homebuyers to make informed decisions throughout the loan application process.

Government-subsidised housing programmes, exemplified by initiatives like the Finance Linked Individual Subsidy Programme (FLISP), hold a promise to increase successful home loan applications. However, challenges in programme implementation and accessibility persist, highlighting the need for continued improvement. Furthermore, the study emphasises the critical role of qualitative research methodology in capturing nuanced insights from industry stakeholders.

Importantly, mortgage originators emerge as significant facilitators in the home loan application process, providing borrowers with access to competitive rates and guiding them through complex lending procedures. This study offers actionable recommendations for stakeholders aiming to enhance access to mortgage loans in Bloemfontein, setting the stage for initiatives focused on promoting financial inclusion and fostering a dynamic real estate market.