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Monday, September 1, 2008
Lending aid

The recent announcement by FNB that it intends to withdraw loan approvals provided to some of their clients, for the purchase of residential properties, could cause major disruptions in the home loan industry.

“Leaving approved clients high and dry is an extreme response to tightening market conditions,” comments Integer Home Loan CEO, Simon Stockley. “The need to make fair, balanced and transparent credit decisions - and to stand by those decisions - is paramount, or hard-pressed South African consumers will once again bear the brunt of industry inefficiencies and indifference.”
Stockley’s concern is the possible knock-on effect on purchasers, sellers, developers, estate agents, valuers and lawyers. “I would invite any person affected by this situation to contact Integer and we will do our best to assist them,” he declares. “We are definitely still open for business and actively seeking to expand our lending book despite the tight market conditions.”
Other lenders, including Standard Bank, have also expressed their surprise and concern at the decision by FNB, which might erode public confidence in South Africa’s property market. Since purchases in developments of the sort being reviewed by FNB often involve the payment of deposits, purchasers who have finance withdrawn could find themselves breaching their conditions of purchase and potentially forfeiting their deposits as a result.
Rising interest rates and the introduction of the National Credit Act in 2007 have imposed further lending strictures on the borrowing public, and have placed greater pressure on homeowners to repay the higher bond instalments. In many cases, a home loan granted a mere six to 18 months ago would today not be granted, primarily due to affordability issues.
“The market is decidedly tougher now,” Stockley acknowledges, “but it would seem that rash or, in the least, marginal decision making has now caused a bank to renege on commitments already made.”
Integer has grown its book significantly since launch in October last year, and has processed over R3.5 billion rands worth of applications, with the committed loan portfolio now rapidly approaching three quarters of a billion rand. An inaugural securitisation issue is planned for later this year.
Integer is a non-bank mortgage provider offering online transacting and competitively priced mortgage products. The company intends to position itself as a private bank for the mass market.

Copyright © Insurance Times and Investments® Vol:21.8 1st September, 2008
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