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Property
Wednesday, August 1, 2007
Only temporary

The newly introduced National Credit Act 2005 will undoubtedly lead to delays in the application and granting of mortgage bonds. But Sotherby’s International Realty (SA) believes the situation will turn out to be only “a temporary, readjustment period.”

Comments the company’s executive director, Barak Geffen, “The time to secure a loan will be extended as details will need to be sourced from numerous parties, relating to an individual’s overall credit status, and fewer bonds will be approved.”
But the Act will benefit the housing market in the long run because it will prevent the raising of bonds that end up defaulting, thus avoiding unnecessary duplication of effort and expense from many different service providers involved in the process. The Act should therefore eliminate artificial impetus in the market through inappropriate use of credit.
Says Geffen, “The new credit act preempts problems that would arise later and won’t affect the ‘authentic’ market’s supply and demand factors. It will prevent multiple banks from being used opportunistically by buyers who end up over extending themselves.”
Reducing inefficiency is a welcome side-effect of the main aims of the Act, which is to eliminate ‘reckless lending’ and avoid over-indebtedness.
 

Copyright © Insurance Times and Investments® Vol:20.7 1st August, 2007
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