At least 60% of bond applications in the Parow region of the Western Cape are being rejected by banks even though the applicants have been through a pre-qualification process according to estate agent Alvin Suklall.
“The houses are classified as affordable homes because they fall into the R350k to R800k category but this does not help when it comes to financing the properties because the banks are declining the applications all the time,” he says.
“I go to great lengths to ensure that any potential buyer is pre-qualified but even then, the scorecard system used by banks means that worthwhile employees who have a steady job are not able to get bond finance,” says Suklall.
He owns a Rawsons Properties franchise in Parow – an area that includes Parow Valley, Ravensmead, Elsies River, Cravenby, Matroosfontein, Bonteheuwel and Valhalla Park.
“The area has been hard hit by bank repossessions and distressed sales and almost every one of these is a result of job losses in the area,” Suklall claims.
He says that while the bond rejection rate is exceptionally high, banks have assisted some buyers by providing personal loans to cover the deposit, the transfer fees or the conveyancing costs and this has assisted some buyers but the vast majority of people are still unable to buy homes.
He says that a lot of the repossessed houses in Parow Valley are being sold quite quickly because the banks are eager to get them off the books but it remains difficult for the potential buyers to get the bond finance necessary to cover the purchase price and the additional fees.
“Buyers are willing to buy less expensive properties than the ones they might first have chosen and this helps to boost sales because if the joint household income is less that R16k a month and the purchase price is below R300k it is possible to get a bond of 100%,” he says.
He estimates that the recent interest rate cut of 0,5% will increase the number of buyers in the region by about 10%.
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