Mortgage Market News:
Standard Bank Home loans
Standard Bank has relaxed its lending criteria and no longer requires customers to pay a deposit if they are buying a house priced up to R1.5m, the bank announced at a press briefing on Wednesday.
Until now, Standard Bank required a deposit of 5% to 10% on property purchases valued up to R1.5m. Standard Bank is the first of the big four banks to officially announce the long-awaited move back to the traditional 100% home loan offering.
The advent of the National Credit Act (NCA) in mid-2007, coupled to the global banking crises, prompted SA banks to lower loan-to-value (LTV) requirements on mortgages to anything between 60% and 95%, depending among others on price, type of property and location.
Standard Bank will now also allow first-time homebuyers to qualify for bonds of 104% LTV on mortgages of up to R1m. Houses bought for between R1.5m and R2.5m and those priced above R2.5m will, however, still require deposits of 10% and 20% respectively. Standard Bank is also relaxing its lending criteria in its credit card division, particularly aimed to benefit lower income earners.
Standard Bank South Africa CEO Sim Tshabalala said although the SA economy is still in distress, there are enough positive signs to suggest now is a good time for the bank to increase its appetite for risk in a measured way.
However, Tshabalala said one of the key concerns that remain is the consumer's ability to repay debt, particularly if more job losses are on the cards. Figures released at the press briefing indicate that Standard Bank's non-performing home loan book stands at a whopping R22bn, around 9% of its total mortgage book of R250bn.
That translates into some 34 500 customers who haven't made payments on their home loan for at least three months. A further 37 400 Standard Bank customers, with mortgage debt worth around R23bn, have had their loans restructured because they could no longer afford monthly repayments.
Tshabalala conceded that the number of Standard Bank customers battling to repay mortgage debt is substantial, but stressed that the bank is not "throwing thousands of people out on the streets".
He said Standard Bank would much rather work with people to keep them in their homes and help them restructure their debt than having to incur the cost of going the repossession route.
Tshabalala said since January 2009 Standard Bank has repossessed only 422 properties while another 1 624 distressed customers have agreed to sell their homes under the hammer.
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