Absa says it is still giving 100 percent loan-to-value to would-be home buyers even in this market but only if they qualify.
According to Sifiso Shongwe, managing executive of Absa Home Loans, loans are being granted across the board to applicants who qualify - meaning they have a good credit rating.
“Since the National Credit Act came into effect, the dynamics have changed and as banks, we have to exercise responsible lending,” says Shongwe.
He says as a bank, they have a target they would like to reach in terms of ensuring South Africans access finance to buy homes. Without giving any figures, he says they have not surpassed that target as yet.
“The focus of demand for and supply of housing is set to be on smaller-sized and higher-density housing because affordability is set to remain a key factor into the future,” he says.
Shongwe says in the current economy, owning a house has become beyond the reach of many South Africans and innovative products both in physical housing and in financing are required to reduce the housing backlog.
He explains that they are seeing growth in the affordable market where people are buying much smaller houses. Banks, he says, are still in the business of lending and are still lending up to 100 percent loans to property buyers if they meet the required criteria.
Young Carr, chief executive officer of the Aida Property Group, says the first thing banks will do on receiving a home loan application is to check the borrower’s credit history.
Good management of monthly bills, including any clothing or furniture accounts and credit card payments is critical even for young people who have no immediate plans to buy a home, says Carr.
“Getting an early start on building a good credit record in this way also means that if there are any minor misjudgments early in a working career, they will most probably be outweighed by a longer period of good credit management when the time does come to buy a home.”
Carr says potential borrowers need to pay attention to the implications of the National Credit Act, which provides that lenders must ensure, before they grant any new credit, that borrowers will not be committing too much of their income to debt repayment.
They do this by compiling a complete debt profile including all other repayments the consumer has to make as well as regular monthly expenditure on items such as transport, food and school fees before they can approve a home loan, he says. – Denise Mhlanga
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I am deeply disappointed that ABSA today confirm they are offering a 100% bond when I have applied for bond to the value of R550 000.00 with a clean financial record and was only told that they will give me 80%. For the fact that I am a loyal client of ABSA with investments I find it disgusting and have the options of moving my finances somewhere than ABSA. - Sekhorane