Credit profiling will slow home sale process

Property sales could be slowed by several weeks as banks begin to implement
the provisions of the new National Credit Act.


So says Berry Everitt, MD of the Chas Everitt International property group,
who notes that while the new legislation is only due to come into full
effect by July, banks and other lenders are already starting to implement
the provision that they must check on the overall credit exposure of any
borrower before they can approve any new loan.


"To do this," he notes, "they have to source information about all and any
of the borrower's current personal loans, vehicle finance agreements, HP
agreements, store cards and micro loans, as well as existing home loans,
from each and every other lender involved.


"Which of course should not be a problem in this age of technology - except
for one thing. There is currently no consolidated database that prospective
lenders can go to for this information, and while the banks and other
players have begun building one, it is not going to happen overnight.


"So, while we welcome the new legislation for the protection it will
ultimately give borrowers, we are concerned that it is going to take much
longer for the foreseeable future for banks to approve home loans -
especially since they face huge fines if they do not do proper credit
exposure checks."


Writing in the Property Signposts newsletter, he points out that this will
have a negative effect on other consumers - namely, home sellers, "who we
understand will shortly face a wait of 60 days or more (as opposed to the
current average of 14 days) to find out whether prospective buyers can
obtain a home loan and thus fulfill the first suspensive condition of their
offers to purchase".


Everitt further says this delay, which will also affect everyone else in the
property sale chain, will be bad enough if the loan is then approved - but
will "verge on disastrous" if the buyer is after all that time turned down
for a loan and the seller has to start marketing the property all over


"In short, the new Act threatens to throw a very large spanner into the
property market works unless a way can be found - and fast - to resolve this


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