select
|

Mortgage bond defaulters causing banks to tighten loan criteria

A recent National Credit Regulator report says that in the third quarter of 2013 approximately 70,000 South African home owners were 90 or more days behind in their mortgage repayments.  The report added that defaulters owed the banks about R38 billion, which is just over 12% of the total home loans of R308,9 billion.

These figures, says Bill Rawson, Chairman of the Rawson Property Group, help explain why the banks have to be ultra-cautious in lending to the home mortgage market.  However, he says, if, as many economists now predict, the era of low-low interest rates is coming to an end, we could see as much as a 2% rise in the rates within the next year and the likelihood is that defaulters will again increase in number. There is a growing danger that if this happens, the devastation in the property market caused by the banks and their disciplinary/rectification measures in 2009 to 2011, will be repeated.

“The banks’ reaction to the average defaulter’s problems in the recent global downturn was in most cases to repossess the home.  In doing so they effectively destroyed the residential property market for two years, causing prices across the board to drop by 10% to 30%.  We in this sector, i.e. those responsible for selling homes, now plead that a different approach be adopted this time if and when the number of defaulters increases again.”

Asked to define what these different measures might involve, Rawson said that as the banks and mortgagees suffer severe financial losses when repossessions take place and judicial liquidations are imposed, he hopes that in future, in consultation with the estate agency fraternity, the banks will work with defaulters to find solutions which will not involve them losing their homes.

“Many of us in the estate agency sector,” he said, “suspect that the losses the banks incur when they do resort to the drastic action of repossession are probably greater than the losses that would be incurred by taking a more lenient attitude to defaulters and finding a solution in conjunction with them.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK