Thu Oct 27 12:53:41 CAT 2016

NCA cleared of bond drop

By unknown | Oct 02, 2007 | COMMENTS [ 0 ]

Isaac Moledi

Isaac Moledi

It seems as if the National Credit Act, which was initially blamed by property and other experts to have contributed to a substantial decline in the approval rate of home loans, was after all not the primary reason for the decline in the mortgage business.

This is according to Betterbond, one of the country's leading mortgage originators. It says that business in this sector is back to normal.

Western Cape figures released by Betterbond show the bond approval ratio which declined from 86percent to 71percent is back to the level it was before the implementation of the credit act (NCA) in June.

Betterbond marketing director Deon Lessing argues that the recovery in the approval ratio to its previous level points to the fact that the industry is now more familiar with the requirements of the act and that the law has followed its course.

"Clearly, the NCA was not the primary reason for the decline in the mortgage business," says Lessing.

He says that rising interest rates and higher bond repayments, against the backdrop of the huge hike in house prices over the last few years, have made houses less affordable.

"Due to a consistent rise in interest rates, bond repayments during the past year increased by about 20percent which far exceeds the average salary increase of consumers," Lessing notes.

Lessing argues that all these factors, and not the NCA, were the larger contributors to the current decline in the mortgage business experienced by the industry.


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