SA homebuyer deposits jump 21.7% as banks tighten lending

• Average homebuyer deposit requirements rise 21.7% year-on-year, but first-time buyers face a smaller 5.6% increase.
• The same buyer could face significantly different deposit requirements depending on the bank, location, property type and financial profile.
• Home loan applications rise 2.4% quarter-on-quarter despite higher borrowing costs, signalling continued demand for residential property.

The deposit squeeze: Same buyer, different bank

South African homebuyers are facing growing pressure to find larger upfront deposits, with average deposit requirements increasing 21.7% year-on-year following September's interest rate hike. But the squeeze is far from uniform, with some buyers potentially securing significantly better financing terms simply by approaching a different bank.

According to Dr Roelof Botha, economic advisor to BetterBond Home Loans, lenders are increasingly differentiating between borrowers based on their creditworthiness, income stability, property location and the type of home they intend to purchase.

“The deposit requirement for all buyers increased by an average of 21.7% year-on-year, but this does not tell the full story. Lender appetite is uneven,” says Botha.

The September repo rate increase, which lifted the prime lending rate to 10.75%, has placed additional pressure on mortgage affordability and deposit requirements. However, first-time buyers have experienced a considerably smaller increase of 5.6% in their average deposit requirement.

The message for buyers and investors is clear: the bank you approach could make a substantial difference to how much cash you need upfront.

Why banks are asking for bigger deposits

Banks assess each home loan application according to the risk of lending against a particular borrower and property. A larger deposit reduces the lender's exposure by lowering the loan-to-value (LTV) ratio.

The main factors influencing deposit requirements include:

• Credit profile
  Repayment history, outstanding debt and creditworthiness.
• Affordability
  Monthly income, existing commitments and disposable income.
• Employment stability
  Consistency and reliability of earnings.
• Property location
  Local market conditions and resale demand.
• Property type
  Conventional homes versus vacant land, developments or specialised properties.
• Lender appetite
  Different banks apply different risk criteria.

Botha cautions that buyers should never assume one bank's offer represents the best available financing.

“Different lenders assess risk differently, and a buyer who does not qualify for a 100% bond at one bank may still receive a more favourable offer from another.”

The R85,000 Difference on a R1.7m Home

Consider a buyer purchasing a property for R1.7 million.

That R85,000 difference could determine whether a buyer can proceed with a purchase or must postpone entering the market.

For property investors, higher deposits also mean more equity tied up in an acquisition, potentially affecting cash-on-cash returns and the ability to expand a portfolio. The implication is significant: comparing lenders is not simply about securing a lower interest rate. It can directly affect the capital required to complete a transaction.

Regional Lending: Where are buyers getting approved?

BetterBond's October 2026 Property Brief highlights notable differences in home loan approval ratios across South Africa.

Regional approval highlights:

• Greater Pretoria: Highest loan approval ratio at 75%.
• Western Cape: Approval ratio of 72%.
• KwaZulu-Natal: Approval ratio of 72%.
• North West: Only region recording a decline in the approval ratio over the 12 months to September.

These figures measure loans granted relative to applications, not the size of deposits required.

Botha explains: “However, a higher approval ratio does not always mean that buyers in a particular region will face lower deposit requirements.”

Regional property values also influence the amount of cash required. In the Western Cape, BetterBond recorded an average property price of R2.26 million over the 12 months to January 2026, with subsequent year-on-year price growth of 13.8%.

A 10% deposit on a R2.26 million property amounts to R226,000, considerably more than the same percentage on a lower-priced home. In premium locations such as Bishopscourt in Cape Town and Sibaya in KwaZulu-Natal, the absolute deposit can be substantially higher because of property values.

Property type can change your financing terms

Not all properties carry the same lending risk. Banks generally assess established freehold homes and sectional-title apartments primarily on borrower affordability, creditworthiness and the property's valuation. Other categories may require more conservative financing.

Properties that can attract stricter lending conditions include:

• Vacant land and undeveloped stands.
• Self-build residential projects.
• Off-plan developments.
• Unusual or specialised properties.
• High-value properties with limited resale demand.

For investors, this makes financing due diligence particularly important before committing to a purchase. A property that appears attractive based on rental yield or capital growth potential may become less appealing if the bank requires substantially more equity than expected.

Buyer demand holds up despite higher costs

Despite tighter deposit requirements, South Africans remain active in the residential property market. According to BetterBond's third-quarter 2026 application data:

• Home loan applications increased 2.4% quarter-on-quarter.
• Average house prices reached approximately R1.7 million.
• Average homebuyer income was approximately R74,000.
• Real buyer incomes increased at an average annual rate of 4.7% over the preceding five years.

These trends suggest that improved household earnings among applicants are helping offset some of the pressure from higher borrowing costs. However, rising deposit requirements remain a significant obstacle, particularly for buyers without substantial savings.

Five steps to secure a better home loan deal

With the South African Reserve Bank's final Monetary Policy Committee meeting of 2026 scheduled for 19 November, buyers should focus on strengthening their financial position rather than rushing into a purchase.

1. Get pre-approved before house hunting

Establish your borrowing capacity and identify potential affordability or credit issues before making an offer.

2. Improve your credit profile

Check credit reports, correct errors and reduce expensive short-term debt.

3. Compare offers from multiple banks

Different lenders may offer different deposit requirements, interest rates and repayment terms for the same borrower.

4. Budget beyond the deposit

Allow for transfer costs, bond registration fees, moving expenses and unexpected costs. Even buyers qualifying for a 100% bond may need additional cash.

5. Maintain a financial buffer

Prepare for changes to lending terms, interest rates or property-related expenses before final approval and registration.

Botha says buyers able to contribute larger deposits may improve their chances of approval and potentially negotiate more competitive interest rates. “Even buyers who qualify for a low-deposit or 100% bond should prepare for transfer and bond registration costs.”

What the deposit squeeze means for property investors

For residential property investors, the tightening lending environment reinforces the importance of capital planning.

Higher deposit requirements can reduce leverage and lower borrowing risk, but they can also affect portfolio expansion and the returns generated on invested equity.

Investors should therefore evaluate the full financing structure rather than focusing exclusively on the purchase price or advertised rental yield.

Three considerations matter most:

• Equity efficiency: How much capital must be committed to secure the property?
• Cash flow: Will rental income comfortably cover debt repayments and operating expenses?
• Financing flexibility: Could another lender offer better terms without introducing excessive risk?

The bottom line: Compare banks before you buy

South Africa's deposit squeeze does not necessarily mean homeownership is moving out of reach. It does mean buyers must approach financing more strategically.

The 21.7% increase in average deposit requirements highlights growing lender caution, but it does not mean every borrower faces the same conditions.

The same buyer, purchasing the same property, could receive materially different offers from different banks.

As Botha concludes: “Understanding what banks are prepared to offer, comparing home loan options and getting the right guidance can make a significant difference.”

For homebuyers and property investors alike, the smartest financial decision may begin before the property search; by understanding the lending market, comparing financing options and knowing exactly how much equity the transaction will require.

Source: BetterBond Home Loans, October 2026 Property Brief. Commentary by Dr Roelof Botha, economic advisor to BetterBond.

Further reading: BetterBond Property Brief – October 2026