By Keneilwe Velaphi
Human Settlements Minister, Mmamoloko Kubayi has expressed concern at the high number of people who cannot access housing.
Just less than six million mortgage and home loan applications were received and processed between 2018 to 2022 and of this number, two million were from previously advantaged persons (PAPs) with just over one million approvals.
At a briefing in Pretoria on Monday, the Minister announced government plans and developments in the human settlements sector.
She said the country’s gap market was experiencing serious difficulties in accessing housing.
WATCH | Minister Kubayi briefs media
According to an analysis of applications from historically disadvantaged persons (HDPs), the total number of applications over five years is about four million valued at R2 trillion, and the number has been on the increase over the years although it slowed down in 2020 because of COVID-19.
“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,” said the Minister.
She added that the number of “HDPs applications is twice as high as that of their white counterparts. In addition, the average mortgage loan approved per HDPs was R527,000 compared to PAP at an average mortgage value of R2,5 million which still indicates wealth inadequate,” Kubayi explained.
The Minister also noted a higher number of applications, 1.3 million from women are approved compared to 1.1 million received from men.
High interest rates resulting in the high cost of living, limited access to finance, higher property prices, a high level of indebtedness and limited supply of affordable housing were some of the reasons touted for the unaffordability of housing.
The Minister also highlighted the work the department is doing in collaboration with other stakeholders, such as building material suppliers and financial institution to ease the burden of housing for first-time homeowners in the gap market.
READ | Interventions to make housing affordable
Home loan market activities
She noted that the Home Loan and Mortgage Disclosure Act (HLAMDA) was promulgated in the year 2000 and that the Act is intended to compel financial institutions to disclose information about their leading activities and practices in the home loan market.
“The information is disclosed to the Office of Disclosure through the Secretariat which is within the Department of Human Settlement, and the information submitted to the Office of Disclosure is mortgages, pension-backed leading and unsecured lending for home loan /use purpose only.
“In the past, it had only been possible to ascertain the number of home loans granted by financial institutions, but not those home loan applications which have been declined and reasons,” Kubayi explained.
She said that these trends highlight the performance of financial institutions, and it helps them to establish the home loan leading patterns and practices of financial institutions.
In her presentation on mortgage approvals for lower -medium-income brands (R0-15,000), the Office of Disclosure’s analysis of the past five years showed a concerning trend in the affordability of housing for the gap market.
She said the decline in the approvals in the gap market is quite significant, and this indicates that access to mortgage finance for the gap market is becoming increasingly difficult.
Home Loan and Mortgage Disclosure Amendment Bill
Meanwhile, Kubayi underscored the need to finalise the Home Loan and Mortgage Disclosure Amendment Bill to address discriminatory lending practices and promote fair access to housing finance.
“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,” Kubayi said.
