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South Africa intends to compel banks to disclose more information about their mortgage-lending practices to boost access to home loans among previously disadvantaged citizens, Human Settlements Minister Mmamoloko Kubayi said.
The government plans to change the Home Loan and Mortgage Disclosure Act, a law promulgated in 2000 that requires lenders to provide details of home loans they’ve approved, Kubayi said at a briefing in Pretoria on Monday.
The proposed amendments would enable the state to investigate consumer complaints about home loans and raise penalties for lenders over non-compliance, she said.
“We are calling for a review of the legislation and polices that will make it even for private sector, especially our financial institutions, to be able to assist us to provide shelter for South Africans,” Kubayi said.
An analysis of recent data has shown waning affordability and a decline in home-loan approvals, especially among middle-income earners, the minister said.
From 2018 through 2022, lenders received about 6 million applications for loans. Two million of those were from previously advantaged groups, of which 1 million were approved, while 4 million previously disadvantaged people applied for home loans and 2,4 million were granted, according to the Human Settlements Department.
The rejection rate for previously disadvantaged groups is “concerning,” despite banks citing poor credit records and a lack of affordability as a key driver, Kubayi said.
“We know that the banks don’t think that it is necessary, but we do believe that we have a case to make in terms of forcing them to disclose when they have declined an application and the reasons they have declined,” she said. − Bloomberg
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