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Banks 'stingy with homeloans'

Nov 20 2009 13:18 Joan Muller

Johannesburg - Banks have still not joined the housing recovery party in any meaningful way despite earlier assurances that they are open for business again, estate agents said.

Andrew Golding, CEO of the Pam Golding Property (PGP) group, said in a media presentation in Cape Town earlier this week that the promised loosening of the credit lending taps have to date been "very marginal".

Golding said although the number of housing sales has risen by as much as 20% over the past six months, increased activity is primarily due to improved sentiment and the fact that home buyers who have the ability to transact on a cash basis are now prepared to do so.

Golding said the upward trend in housing transactions is likely to continue through 2010. However, he believed the major catalyst for the "true re-ignition" of the residential property market in SA will be when the banks start to vigorously lend again and actually compete for business. "It is our hope that this will begin in earnest towards the end of first quarter 2010."

Other estate agents have voiced a similar view, saying that home loan applications are still not being approved as readily as they should be, given banks' public commitment to relax their lending criteria.

Century 21 MD Colleen Gray said the real estate industry is waiting in vain for the much-heralded easing. Although bond application approvals have improved, deposits of 10% are still needed in most cases where properties are priced at more than R1m.

Gray said the fact that the National Credit Act (NCA) requires an overly onerous bond approval process might be a key reason why banks' much-anticipated return to the home loan market is being hampered.

Said Gray: "The NCA is arguably the toughest credit legislation in the Western world and even extremely creditworthy individuals have seen their bond applications turned down. It's time for a reality check."

Meanwhile, figures from mortgage originator ooba confirm that banks remain cautious in terms of mortgage lending. According to ooba, the average bank decline ratio in October was 49.6%.

In other words, one in every two home loan applications was declined by banks last month. In addition, the average deposit banks required as a percentage of the purchase price in October remained at a relatively high 15.6%.

Latest figures from the National Credit Regulator also suggest that banks still have a long way to go to push mortgage lending volumes back up to levels seen 18 months ago. The value of new home loans approved slipped to R17.6bn in second quarter 2009, down 60% from the R42.6bn in second quarter 2008.

- Fin24.com

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expatriot estate ag
Feb 04 2010 12:33 Report this comment

pam golding can say their sales are up by 20% because they deal with foreign investors in the cape, why does he not break down his figures, and tell us the truth, about the local industry, and who exactly bought and sold properties, eg. south africans.

Fed Up System
Nov 27 2009 08:51 Report this comment

With nearly R8m in paid property security I am unable to get n R5m bond to open another business according to Standard Bank. If I walk into Absa with a BEE partner from the street they will gladly help me. Now my question, why must I put my money and expertise in the hands of a person that most probably don’t know or care anything about business? By refusing me a bond based on skin colour they have yet again managed to keep 30 + previously disadvantaged South Africans out of a job not to talk about the affect on the surrounding community. The banks are in it for profit and certainly not in helping to build our nation and to get people to work for their own income.

greedysurvivor
Nov 25 2009 09:47 Report this comment

@william. Everybody gets ripped off. You know you have a cold, yet you have to pay some doctor R300 to tell you what you already know just to get a perscription. The SELLER WHO ACCEPTED THE OFFER paid me that commission and NEVER complained. The fact of the matter remains, even you rip people's SOULS off. Your kids gaming console, with the tantelite processor, took 3 5 year old boys 12 hours in the african sun digging in a hole for $1 a day to supply you with simple luxury. grow up!

AJ
Nov 24 2009 06:59 Report this comment

Stop being so hard on greedy - agents also spend a lot of time with nothing coming of it. And 'greedy' dont boat about your earnings as although you might be happy with it, to others it is a pittance. It is all about perspective. Besides if you make 50 K a month doing one hours successful work and bombing out on other deals or whether you work 40 hours a week for the same.... 50 K is 50 K. Do 50K every hour, every day for a month then it it comes so naturally for you.

SAGE
Nov 23 2009 14:44 Report this comment

Unfortunately the herd mentality has already hurt us. Everyone and his dog bought a house when rates were low because they got "sage" advice from some baby boomer idi@t disguised as either a "learned" financial planner, estate agent or economist who are clinging for dear life to the "safe as houses" rubbish from 20 years ago. This collective stupidity is at the crux of the financial crisis and is why the economy is hamstrung by debt! They reckon if debt is in bricks it is no longer debt?

William
Nov 23 2009 14:06 Report this comment

@greedy, you are proving the others point by bragging about how much money you made. If you only worked one full hour then you don't deserve to make 50k and you ARE ripping people off. Instead of trying to bait people with how much money you made why don't you try add some value to the economy instead?

@SAGE
Nov 23 2009 12:58 Report this comment

I completely agree with you. When you have a complete chop like Colleen Gray telling you that NCA is to strict you know that it's doing the right thing. Having the property blood sucking leeches (I.e. estate agents and the foul breed) complaining that NCA is to strict is like having tobacco companies complain that the anti smoking laws are to strict. The laws exist cause without them your average person of herd mentality would get themselves into trouble.

SAGE
Nov 23 2009 12:01 Report this comment

The banks are still declining applications because the NCA is strict, the economy is absolute shite right now so the risk of default is high and debt levels are still stifling. The property industry has its own propaganda engine that is trying to paint a rosy picture of recovery to lure people into the market either thru fear that prices are rising again or thru rubbish economic data which "supports" their view. The property market must still correct at a lower level before things pic up


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