SA Affordable Housing May - June 2020 // ISSUE: 82 | Page 34

FINANCE MATTERS
(d) Decrease in credit risk appetite. (e) Creating a market
for speculators. (f) Creating market instability.
SIEs have an impact on the economy, the economy
may be impacted by the resultant increase in the cost
of credit which may negatively impact on the broader
housing market and consumers ability to build up assets.
Higher interest rates as a result of an increase in the
bad debt books of a bank which would impact on new
lending due to a more restrictive risk appetite and default
experience, a further negative impact on the economy, the
customer, commercial banks as well as the SARB (South
African Reserve Bank). Because homeownership has
largely been associated with improved tenure security,
greater responsibility over one’s living environment, a
sense of dignity and has been seen to be a catalyst for a
robust housing market; if a homeowner finds themselves
experiencing problems and unable to meet the terms of
their home loan agreement they must: (1) contact their
bank and enquire on making arrangements (i.e. a payment
arrangement with the bank, rescheduling their mortgage
agreement, restructuring of their mortgage agreement).
(2) Continue to pay the property rates and taxes/levies. (3)
Commit to resolve issue / non-payment. (4) Continue to
maintain the condition of their property to minimise losses
and preserve the value of the property. (5) Possibly look
at downscaling by putting their property up for sale and
consider moving into another more affordable property.
SIEs have an impact on the economy, the
economy may be impacted by the resultant
increase in the cost of credit which may
negatively impact on the broader housing
market and consumers ability to build up
assets.
When a property is repossessed it puts both the
bondholder and the mortgagee in a financial and legal
quandary that negatively affects both parties and to
some extent the broader housing market, so if avoidable
and adequate remedial measures are taken, an amicable
resolution that does not result in a SIE would most likely
be the most desired and favourable outcome.
32 MAY - JUNE 2020