Banks should consider 'more flexible lending' for property
When an applicant applies for a bond, he or she will be rated by the bank - and quite frequently they will discover that they have missed being approved for the 80 or 70% bond they wanted by a fairly small margin.
This then usually results in an outright rejection and/or a recommendation either to go away, save a little more and apply again.
"What I cannot understand," says Lanice Steward, MD of Anne Porter Knight Frank, the Cape Peninsula estate agency, "is why the banks do no tailor their loans to the applicant's rating: if, say, he qualifies only for a 70% bond why not give him that?"
If this more flexible policy was adopted, said Steward, it would incentivise people to save harder and, as she sees it, it would not increase the banks' risk in any way.
"Without wishing to restate the obvious, we need to remind ourselves that rand for rand housing promotes more jobs than any other industry, including mining and agriculture. As SA is taking job creation seriously, should not a 20% rise in new housing delivery for the year ahead be a top priority - and what better way to achieve it than by easing up slightly - and responsibly - on mortgage lending?"
Anne Porter Knight Frank Press Release