With up to two-thirds of mortgage applications being rejected, home mortgage finance may be more difficult to obtain in SA right now than at any other time in the past, arguably to the point where the first-time homeowners market in particular is being unduly constrained.
Gerhard Kotzé, CEO of the ERA South Africa property group, says the lenders' caution is understandable given the economic upheavals of recent months, but that it may be time for them and indeed government to take a more accommodating stance in this respect.
"Nobody is suggesting a sudden, reckless opening of the lending taps. However, responsible easing of lending criteria could be considered, counter pointed on government's side by the often mooted idea of tax relief for first-time home owners, along the lines of the US Housing and Economic Recovery Act of 2008.
"The tax credits generated in this way could be put to use in different ways: reducing the total amount of taxes owed by first-time homeowners, increasing the amount of their tax refunds or reducing the amount owed on the property itself.
"In the US for example, similar schemes applying only to principal residences allow tax relief up to 10% of the purchase price of the home, for individuals earning up to $75 000 a year.
"Even if only applied for a limited period here in SA, such a scheme would spur on home ownership at the entry level and provide a boost for the economy as a whole, particularly among property-related suppliers of goods and services."
As for the rest of the market, he says, the priority right now is to prevent repossessions which are on the increase, although not to the extent of the US market where 10 000 homes a month are being repossessed.
"Arguably a distressed homeowner's best option is to restructure a current home loan. Provided the home is worth more than the amount owed, in spite of the current market, the lender may be willing to let you make partial payments or skip payments, if there is a reasonable plan to catch up. Alternatively you may be able to re-negotiate your bond agreement and arrange more time to pay the bond off or lower the interest rate."
If, however, you investigate all your options and are still obliged to sell your property, take advice from a knowledgeable estate agent to ensure that you place the property on the market at a price that will encourage a swift sale.
Issued by ERA South Africa