South African homebuyers are now required to pay significantly more upfront when purchasing property, as average deposit demands have risen by 21.7% over the past year following the September interest rate increase. This shift reflects lenders adopting stricter risk management in response to higher borrowing costs, though the exact impact varies depending on the borrower’s profile, the property type, and which bank they approach.
First-time buyers have experienced a smaller rise—just 5.6%—compared to the broader market. However, this smaller increase still highlights how deposit requirements now hinge more on individual lender assessments than on the buyer’s category. A single applicant might encounter deposit demands differing by tens of thousands of rand simply by choosing a different financial institution.
Banks have tightened loan-to-value (LTV) ratios as mortgage affordability declines. Dr Roelof Botha, an economic advisor to BetterBond Home Loans, explains that lenders now evaluate credit scores, income stability, property location, and even the type of home being purchased. “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”. Botha states. “Lender appetite is uneven.”
Banks demand wildly different deposit rules
For example, a buyer purchasing a property worth R1.7 million could face a 10% deposit requirement, R170,000, at one bank, while another might demand 15%, or R255,000. The R85,000 difference could determine whether the transaction proceeds or collapses. Investors also feel the pressure, as higher deposits reduce available cash flow and limit portfolio expansion.
Regional loan approval rates reveal further disparities. Greater Pretoria maintains the highest approval rate at 75%, while the North West is the only region where approvals have decreased over the past year. Yet even in areas with strong approval rates, deposit demands remain high. In the Western Cape, where average property prices reach R2.26 million, a 10% deposit alone amounts to R226,000, a sum far exceeding what buyers in lower-cost markets must provide.
Property type also influences financing terms. Banks distinguish between established homes, apartments, vacant land, off-plan developments, and high-value properties with limited resale potential. 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.
Buyers still chase homes despite higher hurdles
Despite tighter lending conditions, demand for residential property has held steady. Home loan applications increased by 2.4% in the third quarter of 2026, with average house prices at R1.7 million and buyer incomes around R74,000 monthly. While real incomes have grown by 4.7% annually over five years, deposit requirements now consume a larger portion of savings.
Experts now advise buyers to integrate financing into their property search process rather than treating it as an afterthought. Securing pre-approval, conducting credit checks, and comparing offers from multiple lenders can reveal significant variations in deposit requirements. Even those qualifying for a 100% mortgage may still need cash for transfer fees, registration costs, and moving expenses. Botha stresses that the chosen bank can determine not just the interest rate but whether a deal closes at all.
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. Botha notes that even with stable rates, a borrower’s deposit obligation depends on how a bank assesses their risk. This means financial terms could still shift based on the institution selected.
