Institute urges banks to review bond policies

The decision by certain banks to offer bonds to previously disadvantaged communities is welcome, but it should raise questions about the banks' policies on bonds in general, says Ivan Neethling, chairman of the Western Cape branch of the Institute of Estate Agents.

Neethling was commenting on FNB's decision to offer bonds to individuals or families whose monthly earnings are less than R15 000 and Absa's decision to make bonds available to those earning below R11 000.

"The return of the banks to the emerging sector is in line with the memorandum of agreement they signed with the government previously," Neethling says.

"It shows a growing confidence in the affordable housing market's ability to meet commitments. The institute has for some time been saying this market has become a great deal more stable and responsible, and deserves recognition."

Neethling says, however, that it is worrying that although some banks are taking this step, others are hanging back and staying outside this market.

"At a recent get-together of property practitioners, it was said that one bank, which previously had a long history of service in the housing sector, had given only two bonds to Khayelitsha buyers in the past two months. This sort of reluctance in the face of such huge demand for affordable housing makes no sense at all."

Equally worrying, says Neethling, is that in the more expensive home categories some banks have increased the deposits they are demanding by 5 percent.

"The cutbacks in the middle and upper brackets also make little sense to us at the institute because this sector has traditionally consisted of reliable payers and, with the National Credit Act restrictions, they are closely monitored before being granted any sort of loan."

Weekend Property Supplement (Saturday Argus)

Posted at 10:22AM Jul 27, 2009 by Editor in Home Loans  |