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Johannesburg - There has been a sharp slump in the number of home loans granted to South Africans in the under-R15 000 per month income bracket, the National Credit Regulator (NCR) said on Wednesday.
The total number of home loans granted in South Africa has almost halved in 2008 due to the global recession and ensuing financial crisis.
"There's been a huge contraction in credit granted - and the preliminary numbers for the March quarter indicate that the contraction is actually continuing," said NCR CEO Gabriel Davel.
The main problem is that South Africans can't afford to put down a deposit, said First National Bank property strategist John Loos.
"South Africans don't have a saving culture - we are a low-saving country."
Poorer households see credit drying up more drastically than those earning over R15 000 a month. Paying for necessities becomes more important than saving for a mortgage deposit, said Davel.
"This has been a response to the financial crisis, but we can't in the long run continue as a country where all the mortgages go to higher income brackets," said Davel.
But, according to Loos, banks' hands are tied.
Banks are performing a balancing act between future income stream potential and bad debt risk.
"Times are tough and banks are required to lend responsibly and look after depositors' money," said Loos.
- Fin24.com