Banks still reluctant to issue bonds, says expert
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.