Criticism of the banks’ stance on the National Credit Act has been ongoing for most of this year, the general feeling in the property sector being that the act is being interpreted too strictly and that creditworthy potential borrowers are being rejected because of arbitrary “score card” criteria which often do not take into account their true financial positions.

A practice that Lanice Steward of Anne Porter Knight Frank finds particularly inappropriate is that recently introduced by certain banks of refusing bonds to applicants who want to buy sectional title units that don’t have garages or enclosed parking areas. What is more, this facility has to be declared in the title deeds if a loan is to be granted.

Equally inappropriate, she says, is the new policy of one bank to refuse to issue loans to any freestanding home that has less than 150 m² of erf space.

“This will have a huge impact on the granting of loans to the already struggling lower end of the market. These new policies are in every way similar to the redlining of certain areas adopted by some banks previously. Again, they don’t take into account the financial circumstances of the applicant – they simply place a blanket ban on certain properties without any other factors being considered.

“An easing up of the NCA criteria and a further drop in the interest rates are now essential to take the housing sector out of its current “unexciting” phase. As has been said by several spokespeople for the housing sector, the 0,5% drop in the rates, although welcome, will not be sufficient to bring about a full recovery in the residential property market nor is it enough to enable the majority of developers to resume delivery.”