The Banking Association of SA (Basa) has come out swinging against Human Settlements Minister Mmamoloko Kubayi's statement on how the banks conduct their rejections and acceptances of home loans, especially when it comes to previously disadvantaged groups.
The minister said that the rejection levels of these home loan applications were concerning, and she called for stricter legislation that would provide more transparency on the banks’ criteria for selecting and rejecting home load calculations.
Kubayi noted this week that just less than 6 million mortgage and home loan applications were received and processed between 2018 to 2022 in South Africa.
She added that of this 6 million, only 2 million were from previously advantaged persons, with just over one million approvals.
The minister said that South Africans are experiencing serious difficulties in accessing housing.
“The total number of approved applications over five years is 49% of the total valued at R1 trillion compared to a decline which is valued at R636 billion and approximately half of the applications are declined which is an indication the number of people who can’t access housing is still high,” Kubayi said.
The applications of historically disadvantaged persons (HDP) are twice as high as that of their white counterparts, she said.
“In addition, the average mortgage loan approved per HDPs was R527,000 compared to previously advantaged persons at an average mortgage value of R2.5 million which still indicates wealth inadequacies,” Kubayi added.
Kubayi’s claims are unfounded
But Basa has rejected the minister’s claims and noted that there was no proof or basis to these comments.
“Every bank has its own business and risk criteria for extending home loans and other forms of credit, race is certainly not one of them,” Basa said in a statement.
The organisation said that these “allegations of unfair discrimination by banks remain unfounded and are frankly irresponsible”.
“South Africa’s banks hold in trust the savings and salaries of South African workers, professionals and businesses. This makes up approximately 75% of the funding of banks and they have a fiduciary responsibility to protect these depositors’ funds,” the organisation explained.
It is due to these reasons that SA’s banks are strictly regulated by the relevant authorities to ensure that they do not lend recklessly and that those who are lent depositors’ funds are able to repay their loans, thereby protecting the savings that need to be available on demand, Basa emphasised.
The organisation said that according to the banks that belong to its membership, 48% of home loans are declined because of a lack of affordability, 34% are declined because of an adverse credit record, while 13% are declined because of unacceptable security risks.
Below is a list of the banks that are members of Basa:
The Home Loan and Mortgage Disclosure Amendment Bill
Minister Kubayi has underscored the vital need to finalise the Home Loan and Mortgage Disclosure Amendment Bill.
The bill will tackle and fight discriminatory lending practices and promote fair access to housing finance, she said.
“The Office of Disclosure is an important institution which is a critical element in achieving spatial transformation and integrated human settlements. Currently, the information it receives is riddled with data duplication and incompleteness.
“Without data quality control and non-compliance by financial institutions, the picture we have just presented could be worse than we think. It is therefore important that this office be given all the necessary support, including legislative amendments to strengthen its ability to discharge its responsibilities,” she concluded.
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