Tebello Radebe
Chairman of the Association of Mortgage Lenders, Duncan Reekie, says rising interest rates and growing unemployment are the main reasons why the banks have not financed as many houses as expected.
Reekie’s response follows widespread criticism levelled against the government for failing to deliver on its promises for houses. “The view of the banks is that demand for credit has been weak owing to the prevailing economic conditions. High interest rates impact unfavourably on housing demand by way of affordability and the lack of growth in the economy has curtailed the pool of new potential homeowners with a stable income required to service a mortgage loan,” he says.
A target of 50 000 was set by the banks and the government for the period June 1 1995 to May 31 1996 after the Mortgage Indemnity Fund (MIF) was established, but the banks approved only 35 000 loans worth R2,7-billion. At the same time, the real goal of the MIF was to help people earning less than R3 500 a month and only 19 000 of these loans with a total value of R765-million were granted.
Ironically, Reekie was talking at the regional symposium hosted by the Housing Ministry at Interbuild 96 in Johannesburg where representatives of housing ministries from neighbouring states reported increases in housing delivery in their countries.
The South African, Namibian, Zimbabwean, Botswanan and Swaziland housing ministries described various mechanisms and plans aimed at devising alternative funding systems to house the more than 70% of their populations that are homeless on the sub-continent who cannot be financed by the banks.
>From Namibia, Housing director general Karl Gowaseb said his country had created a community-based scheme which is supported by the government to help low income earners to build houses and already 4 500 have been built to address the 40 000 backlog in his country.