Home loan applications drowning in NCA red tape

Home loan applications are still not being approved as readily as they should be, given banks’ public commitments to reopening the credit taps for property and this year’s cuts in interest rates. 
“The real estate industry is waiting in vain for the much heralded easing,” says Henry Lee of CENTURY 21 Prime Properties which markets in the Alberton area, arguably one of the most representative property markets.
“Bond application approvals have improved and probably around 75% are being accepted but not to the 100% levels claimed by the banks, and beyond the R1m mark, deposits of 10% are still needed in most cases,” he adds.
“Also the lower and elite segments of the market are seemingly receiving preference while mid-range approvals are harder to obtain, which means an important segment of the market is not in the picture.”
Tamara Nettmann of CENTURY 21 Lifestyle Team, which trades in the Dainfern area, says it appears that bond applications are often being evaluated by inexperienced bank employees. “At our level, the credit-worthiness of an applicant is not always clear cut and we need greater expertise in this respect,” she says.
Accepting that the banks are giving priority to clearing their repossessions backlog, the situation nonetheless begs the question of whether the National Credit Act (NCA) needs to be reconsidered says CENTURY 21 MD Colleen Gray.
The NCA governs all credit approvals including home loans, and information that must accompany applications includes salaries earned, pension and PAYE payments, medical aid premiums, rates, taxes, levies and UIF contributions.
Also required are such household budget details as domestic workers’ wages, garden services, travel costs, insurance payments and funeral policies as well as retirement annuities, timeshare commitments, monthly grocery costs, clothing expenses, telephony costs, TV licences, DStv, vehicle costs, furniture and fittings and investment costs, even alimony payments.
“Finally, you have to include the market value and liabilities for fixed property and any other assets and liabilities, so purely on the grounds that all this is overly onerous, there would seem to be a case for easing,” says Gray.
“The NCA is arguably the toughest credit legislation in the western world and even extremely creditworthy individuals by any standard have seen their bond applications turned down. It’s time for a reality check.” 

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 24 Apr 2018
      The thing about the property ladder is that at some point in our lives we all have reason to want to climb a rung or two higher. Sometimes, it’s because we’ve outgrown our previous dream home, or because we want to be in a better neighbourhood that’s closer to work or to schools. Sometimes it’s because our circumstances have changed, and we’re taking care of elderly parents or relatives. Sometimes, it’s just because we want a property that reflects the financial status our hard work has won.
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us