The government is considering stricter regulations to compel banks to disclose more detailed information about their home loan-lending practices. The aim is to boost access to home loans, particularly for previously disadvantaged groups, Human Settlements Minister Mmamoloko Kubayi said during a briefing in Pretoria.
The government plans to amend the Home Loan and Mortgage Disclosure Act, a law initially introduced in 2000, to increase transparency in the lending process. These proposed changes would give the state more authority to investigate consumer complaints regarding home loans and impose higher penalties on banks for non-compliance.
“We are calling for a review of the legislation and policies that will make it even for the private sector, especially our financial institutions, to be able to assist us in providing shelter for South Africans,” Kubayi said.
Recent data highlights growing concerns over affordability and declining home loan approvals, particularly for middle-income earners. Between 2018 and 2022, lenders processed approximately 6 million home loan applications. Of these, 2 million applications came from previously advantaged groups, with 1 million receiving approval. In contrast, 4 million applications were submitted by historically disadvantaged persons (HDPs), with 2.4 million successfully approved, according to the Department of Human Settlements.
The rejection rate for HDPs remains a significant issue. Banks have cited poor credit records and limited affordability as the main reasons for rejecting applications. However, Kubayi expressed skepticism about the sufficiency of these explanations, emphasizing the need for greater transparency from financial institutions.
“The rejection rate for historically disadvantaged groups is concerning,” Kubayi said. “While banks may not see the necessity, we believe they must disclose the reasons behind declined applications.”
The proposed amendments to the Home Loan and Mortgage Disclosure Act are part of the government's broader efforts to address disparities in the housing market and promote equal access to homeownership across all population groups.
