Budget news from BetterBond

Rudi Botha, CEO of BetterBond, SA’s biggest mortgage originator, says: “From our point of view, there were two especially positive items in the Budget speech.

“The first was the tax relief proposed for companies which are able to provide home loans, housing assistance or actual houses to their employees. Prospective home-owners, especially first-time buyers, are finding it very difficult at the moment to meet the deposit and income criteria necessary to secure a home loan, and this will no doubt encourage more employers to help them achieve home ownership.

“Secondly, we were pleased by Finance Minister Pravin Gordhan’s commitment to engage with the banking sector to explore ways of increasing the level of mortgage lending in relation to both vehicle finance and unsecured credit such as personal loans, and his admonition to the lending market in general to remedy its behaviour with regard to reckless lending and the imposition of garnishee orders that often leave people without any money to live after their debts have been paid every month.”

BetterBond, he says, has repeatedly pointed out the dangers inherent in the recent huge growth in unsecured lending, particularly by loan sharks who take advantage of consumers and charge exorbitant interest rates, but also by the banks which have shown a preference for short-term, unsecured lending over long-term home loans that are secured by property.

“Chief among these is the downward cycle of poverty it creates, until it can get to the point where people have to borrow more money just to buy food and other necessities, but even in less extreme cases, we see many consumers who are so burdened with the high-interest rate monthly repayments on personal loans, as well as vehicle and credit card debts, that they are quite unable to qualify for the home loan that would enable them to buy their first home and start building wealth instead of spending it.

“Consequently, we wholeheartedly agree with the Minister that something urgently needs to be done about this situation.”

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