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Home loan plan targets civil service
Sapa - South Africa
The government's mortgage default insurance (MDI) scheme, aimed at helping lower-middle-income earners to own their own homes, would start operating in the new financial year, it emerged yesterday.

The R1 billion scheme would initially apply to police officers, nurses and teachers, Deputy Human Settlements Minister Zou Kota-Fredericks said in Parliament.

“We have not quantified in terms of numbers, but we know exactly what category (of people) we are talking of – police, nurses and teachers,” she said.

“Professionals who (earn) between R3 500 and R15 000 (a month) – that is the area we are focusing on at the moment.”

The MDI would allow people who earn between these amounts to “access a subsidy from the provinces of up to R83 000”, enabling them to secure housing finance of up to R300 000 from an accredited bank. It would “mitigate the default risk” on mortgage loan repayments to the banks, Kota-Fredericks said. 

Residential house prices show increase in December 2011
Ooba - South Africa
According to the latest oobarometer results released by ooba - South Africa's leading bond originator - property prices showed positive year-on-year growth of 6.2% in December. Although this increase is a positive development for the local residential property market, ooba predicts that the market will continue to trade sideways in 2012.

The December oobarometer price index reveals that the average house price rose to R870 564 from R819 977 a year earlier. A month-on-month increase of 3.6% was also recorded in December. The growth in the average purchase price amongst first time buyers showed a significant increase, with year-on-year growth of 14.5% to R656 230 in December 2011 from R573 112 a year earlier.

Saul Geffen, CEO of ooba, says that while this increase is encouraging, he anticipates that residential property prices will continue to drift sideways throughout 2012 and doesn't expect the average annual property price growth to exceed inflation by much this year.

What to do if I cannot pay my bond anymore? Know your options
Iol property - South Africa
With such tough financial times at present, more and more people are finding themselves in debt or financially strained.

Failure to pay home loan instalments can lead to the involuntary sale of one's home - but this last resort, and a lifetime filled with debt, can be avoided.

According to Richard Gray, CEO of Harcourts Real Estate South Africa, "It is so important for those individuals facing financial pressures to know the options that are available to them. Harcourts works in partnership with a number of banks which aim to assist such individuals and lead them out of debt."

Houses overvalued by 25%? A rejoinder
Rode - South Africa
It appears estate agents and house investors and other stakeholders in the housing market have experienced serious anguish and denial following the launch of Rode’s Report (quarter 4 of 2011) on 26 January 2012. At the press conference at FNB’s offices in Fairland, Johannesburg, I stated that houses were fundamentally overvalued by at least 25%; furthermore, that house prices will, as a consequence, decline in real terms over many years (unless one assumes a quick collapse like in the USA).

Estate agents’ anxiety can be understood as stagnant prices tend to be associated with fewer transactions and, therefore, less commission. Naturally, the messenger is to be blamed.

Our findings have three crucial implications:

  • Pertaining to mortgage lenders, prudent lending practice would dictate that 100% mortgage loans should be the exception. The claimed tendency for banks to once again start reverting to 100% mortgages is disquieting.
  • In the absence of expected capital appreciation, the man in the street who is contemplating buying his first house or who is relocating, should consider renting rather than buying. This is so because renting is now (and has been for many years) much cheaper than owning, with the help of your friendly banker. It is a false argument to say, “I do not want to make a landlord rich”, when one makes a bank “rich” by paying interest on a mortgage bond!
  • Housing developers and building contractors face a prolonged period of modest activity.


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