Standard Bank announced it would offer first-time homeowners 104 percent loan to value (LTV)

Bank loosens home loan noose


EAST London’s property market is set to turn around as buyers find themselves able to secure home loans once again.


One bank is to relax its lending criteria after banks last year tightened lending requirements to reduce their risk during the global financial crisis, requiring potential new homeowners to put down a deposit of anything between 10 and 30 percent.

Yesterday, Standard Bank announced it would offer first-time homeowners 104 percent loan to value (LTV) home loans for properties used as primary residences, valued up to R1million.

This means the bank would finance the full value of the property, as well as provide funding to cover costs.

Peter Schlebusch, chief executive officer of personal and business banking, said it was important to provide access to finance to the lower end of the economic spectrum.

“People in this sector have been hardest hit by higher inflation, job losses and the general slowdown in the economy.

The bank will offer customers 100 percent LTV loans for properties valued up to R1.5m, but will still require a deposit of 10percent for properties between R1.5m and R2.5m and a 20percent deposit for properties over R2.5m.

Estate agents in East London said the news was a welcome break in what had been a dismal year for real estate.

East London Institute of Estate Agents chairperson Sanet van de Merwe said Standard Bank’s move should see more property deals being finalised over the next few months.

“At the moment there are a number of property sales that are signed up but are pending, as buyers have not been able to secure a loan due to the large deposits required,” she said.

She estimated that at least half of all sales were currently being affected by the strict lending criteria of the banks.

“This will also have a roll-on effect for other sales, as a number of property deals are being held back due to the ‘subject to sale of property’ clause,” she said.

The deposit requirements for higher value homes would not deter the market as people purchasing in that price bracket had access to the capital needed, she added.

Pam Golding Properties principal agent Hanlie Bassingthwaighte said the news was “a great relief”.

“We have seen a number of first time homeowners discouraged from entering the market due to the strict lending criteria, as they simply don’t have the funds to pay the transfer costs, let alone the deposit,” she said.

Bassingthwaighte said she was surprised that the move had come from Standard Bank, as it had, up until now, been the most conservative.

“They are taking a huge step, which can only mean positive changes in the current market,” she said.

Bassingthwaighte said she would not be surprised to see the other banks follow suit. - By DERRICK SPIES
Business Reporter

Story from  Daily Dispatch



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