CUSTOMER STORY
Breaking the bond barrier
Many bank customers don’t currently qualify for housing subsidies
or home loans, trapping them in the rental market.
C
urrently at just 8,5%, South Africa’s prime interest
rates are at rock-bottom lows; a far cry from
the heady days of 1998, when the prime cost of
borrowing was pegged at an astonishing 25%. Our
recent cost of borrowing has encouraged many South
Africans to look into owning their own homes. However, banks
are still suffering from the housing bubble hangover and are wary
of loading too much risk onto their portfolios. Besides this lender
caution, banks also have to toe the National Credit Regulations line,
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BANKER SA
and home buyers have to meet strict affordability criteria to qualify
for mortgage loans.
During the property boom years as many as 80% of all home
loan applications were granted. Currently the bond approval rate
is around the 50% mark for those lucky enough to have a minimum
of a 10% deposit, but numbers are on a gradual upward trajectory.
The increased number of approvals since the recession period is
due to more buyers showing affordability and property pricing
coming down to more realistic levels.
Edition 7
Subbed Banker SA Customer story.indd 32
2013/10/15 11:07 AM