Banks still re­luc­tant to is­sue bonds, says ex­pert

Weekend Argus (Saturday Edition) - - PROPERTY -

AL­THOUGH ALL South African banks have in­creased the num­ber of res­i­den­tial prop­erty mort­gage bonds they are pre­pared to is­sue and have im­proved the loan-to-value ra­tios (in some cases to 100 or even 105 per­cent); they re­main cau­tious about SA’s growth prospects.

Banks think the risks are still high and ma­jor job losses are not yet a thing of the past, says Ivan Neeth­ling, Chair­man of the West­ern Cape branch of the In­sti­tute of Es­tate Agents.

“I have re­cently come across cases in which qual­i­fied pro­fes­sion­als such as char­tered ac­coun­tants and a pae­di­a­tri­cian failed to get the full bonds for which they ap­plied, re­gard­less of the fact that they qual­i­fied for the full amounts and that there was suf­fi­cient eq­uity in the prop­er­ties they wanted to buy. In one in­stance, one of the banks of­fered a bond of R1 mil­lion when the ap­pli­cants had ap­plied for a bond of R1.7m,” he says.

“The strong­est de­mand for home fi­nance is now com­ing from the R450 000 to R490 000 sec­tional-ti­tle buy­ers and in this sec­tor there is at last a flurry of ac­tiv­ity from de­vel­op­ers who re­alise that banks are more dis­posed to grant­ing bonds here than in other seg­ments of the mar­ket.

“On many projects de­vel­op­ers have been draw­ing in buy­ers with a va­ri­ety of ad­di­tional ex­tras such as bur­glar alarms, roll-on lawns, post boxes and bound­ary walls and the like.

“Even th­ese, how­ever, are some­times in­suf­fi­cient to get the project sell­ing quickly.

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