Not only has the effective cost of credit not come down by much, but banks are now also insisting on deposits of 10 to 20 percent. Say good-bye to mortgage bonds of more than 100 percent of market value.

Stories are rife of bank officials who encouraged 'liberal' valuations during the boom times so as to ensure more business and higher performance bonuses for themselves. The net effect of this is that we are now sitting with a 'lost' generation of first-time home-buyers who must first save for a deposit before buying; thus being unable to buy.

Thus, the financial meltdown has reintroduced a fundamental rule of banking, namely that the mortgagor must also have a significant financial stake in the bonded property: sound banking practice can only support 100 percent bonds as a short-term aberration while the prospect of rising house prices continues to outweigh the risk of default.

One of the unintended effects of the National Credit Act (NCA) is that it now takes banks much longer, and at greater expense, to call up a mortgage bond, collect debt and write down bad debt.

SARS, by the way, does not allow writing down of bad debt without a court order.

The s. 129 notice and prescribed procedures opened the door for professional debtors to string out the process by going through debt counselling while still staying on in their houses. An attorney we spoke to claims there is 'chaos' in our courts, with stacks of court applications waiting for judgement and attachment.

It is surely not difficult to imagine that the NCA thus has the effect of making banks more conservative in granting mortgage bonds. The motto seems to be: rather no business than bad business. And who can blame them?

All the above factors haven?t even considered the extraordinary world economic prospects and their impact on South Africa.

So, dear reader, do you still think the 'upturn' or 'recovery' is around the corner?

Published courtesy of Rode & Associates (Pty) Ltd