Housing crisis to end soon as banks are easing up on requirements

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Easing up of banks on mortgage loans criteria augurs well for South African residential property.

South Africa’s banks are easing up on the criteria that they apply to home mortgage loans (whilst still adhering to National Credit Act regulations), says Leonard Kondowe of Rawson Finance, the bond originators serving some 160 Rawson Properties residential property marketing franchise teams countrywide.

Talking recently to Rawson Properties Western Cape franchisees at a quarterly get-together, Kondowe said that several indicators point to the whole bond mortgage scene becoming far more consumer-friendly.  In particular, he mentioned that:

• One of the top banks in South Africa is now quite regularly granting 100% loans to salaried applicants for properties valued below R1,5 million, the offers valid for both clients of this bank and those who bank elsewhere. To be successful, said Kondowe, the loan applicant must be able to show that he has a favourable repayment profile, that he had not in the past 12 months taken out an unsecured loan with a monthly repayment not exceeding 10% of his gross income and that any such loan is below R50 000.

• Most banks have increased their 100% loans to the affordable housing segment (i.e to those clients earning single or joint income of not more than R18 000 per month.)

• Rawson Finance has seen their grant levels increase by more than 100% from May 2011 to May 2012, a sure sign that the South African property market has taken a turn for the better. 

The current low interest rates, said Kondowe, will probably be maintained for the foreseeable future. 

“People who do not make the effort to pre-qualify for a bond and start hunting for a house now will, I predict, find that they have missed out on the low house prices and low interest rates,” said Kondowe. 

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