Bank Loan Moratorium

[Superjakes]

Hi Guys, this is quite a personal subject, but I am curious about it.

I have family living in Kathu, Northern Cape. The town is being hit quite hard by the current low commodity prices, as the main lifeblood is the iron ore mines in the area. Long story short - my FIL has taken a retrenchment package from the mine, with the intention of selling his house in town and moving on to the next chapter in his life. Somebody told him that since the town has been hit hard by recent events (lay off at the mine, etc), all major banks have placed a moratorium on home loans for property in town. Google doesn't seem to know anything about this, can anybody in the know perhaps confirm?

Thanks!

 

[Nerfherder]

I don't see why they would do that....

Considering they must own a lot of bonds in the area

 

[Superjakes]

Just to be clear - they referred to new finance. Meaning that it would be impossible to sell your property to somebody without cash in hand. Existing bonds continue as is.

 

[pinball wizard]

Yeah, banks may decide they are over exposed in a certain area and decline new applications. They wont exactly advertise it as a moratorium.

I've seen them do it in certain suburbs due to risk exposure.

 

[Stefan!]

As far as I know - banks do not like over exposure.

For eg: I applied for a bond within a complex. They told me upfront that sometimes when a bank has to many bonds in one complex, they do not grant anymore as this exposes them to risk if something bad happens. (Body corporate screws up etc)

I had the same issue when l tried buying a house on auction. Thats all I can add.

 

[Nerfherder]

Yeah, banks may decide they are over exposed in a certain area and decline new applications. They wont exactly advertise it as a moratorium.

I've seen them do it in certain suburbs due to risk exposure.

Yes, I have seen that before. But its specific banks.

 

[The_MAC]

As far as I know - banks do not like over exposure.

For eg: I applied for a bond within a complex. They told me upfront that sometimes when a bank has to many bonds in one complex, they do not grant anymore as this exposes them to risk if something bad happens. (Body corporate screws up etc)

I had the same issue when l tried buying a house on auction. Thats all I can add.

I've heard of that as well, particularly complex's, but I'm sure the same applies to suburbs, depending on how they dissect or segment the areas.

This would probably be dynamic though, as circumstances change.