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Johannesburg - In a market environment where banks' strict lending criteria are strangling the housing market, First National Bank (FNB) has taken the first step to make buying a house easier, by reducing its deposit requirements.
At the same time the bank has come up with a rapid sales plan for sellers under pressure, in which their houses are sold by an estate agent rather than on auction.
Other banking groups have not yet followed FNB's footsteps and are still keeping to their strict deposit requirements.
Sean O'Sullivan, head of sales and marketing at FNB's home loan division, says the bank currently requires a deposit of 5% of the purchase price and could possibly move towards requiring a 2% deposit.
The chief executive at FNB's home loan division, Jan Kleynhans, points out that considerations in determining the deposit include the quality of the suburb where the purchase is required and the market conditions.
In areas over which the bank has reservations a larger deposit may be required.
On Wednesday Luthando Vutula, managing director at Absa home loans, declared that Absa still requires a 15% deposit from Absa clients and 30% from other clients.
Standard Bank spokesperson Ross Linstrom notes that for new loans of up to R300 000 Standard Bank clients with a cheque account need a deposit of 5%, for loans of R300 000 to R2.5m a deposit of 10%, and for those above R2.5m a deposit of 20%.
FNB's new rapid sales plan involves the houses of sellers in financial straits being sold by appointed agents, so as to get the best price for the seller, instead of selling them on an auction where properties fetch 20% less.
For buyers of these houses 100% mortgage finance is available from FNB if they meet certain criteria. O'Sullivan explains this is in order to help buyers who have previously not had access to the market. The properties are valued by professional valuer and some 300 such properties are currently being sold a month.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.