Nedbank Tightens Home Finance Criteria - 11-11-08

November 11 - In a rare and unprecedented move, the Chief Executive of Nedbank, Tom Boardman, came out with an official statement, reassuring its customers and the general economy that there was absolutely no basis for the rumours currently flying that the bank is in financial trouble. "Normally we don't comment on speculation," he said, "but I think that the fact that the national carrier of news put something in a bulletin at 10 o'clock at night must have been a contributory factor."

However, it has been confirmed that Nedbank is tightening its home finance criteria yet again and for the first time, this firm has scrapped 100% home loans altogether. Essentially, this means that in order for a loan to be considered, borrowers will have to come up with a specific portion of the value of the property in the form of a deposit.

Nedbank directed bond originators and mortgage companies that those looking to purchase a home valued at R300,000 would need to come up with a deposit of 5% - making it even more difficult for buyers at the low end of the spectrum to come up with the necessary finance and be able to afford a home.

Homes that are valued at over R300,000 are already subject to a deposit requirement, with the percentage varying according to the value of the property.

The directive to tighten home financing criteria was given by Nedbank's General Manager of Origination and External Channels, Charles de Winnaar, who warned that these changes would be effective immediately. This is the second time this year that Nedbank is tightening its lending rules and making it more difficult than ever for buyers to purchase their dream home.