Siya Miti

Siya Miti

As the slowdown in the property market gathers momentum, two of the big four banks have made it more difficult for their clients to draw cash from their home loans in a bid to "manage their risk".

Economists have hailed this as a prudent move as it prevents unlimited access to credit through home bonds - a trend that helped fuel the downfall of the US economy and the subsequent global market crisis.

Absa Home Loans managing executive Luthando Vutula, said: "The bank sees the amendment of the facility to prevent customers from going further into debt and putting their homes in jeopardy."

Absa customers will now have to apply at their bank branches to access extra funds paid along with monthly instalments, including re-paid capital and equity that has built up over the years.

The application includes an assessment to gauge their ability to repay the loan after the funds have been withdrawn.

Absa said it took the decision to amend the facility due to the decline in property values over the past six months.

"Allowing access to the original loan granted without a validation of the property's value increases the risk for the customer and Absa," Vutula said.

Asked if Nedbank would follow suit, the bank said only that it had implemented "new" methods to assess clients.

Standard Bank and First National Bank said they had no plans to change policy around accessing equity on bonds.