Banks may have to get tougher on mortgage loans, which will hit both your pocket and the residential property market as a whole.
The Reserve Bank's annual report, tabled in parliament this week, said the bank was planning to increase the risk weighting of home loans to reflect their real risk.
Bob Tucker, the chief executive of the Congress of SA Banks (Cosab), reportedly said only the amount lent above 80 percent of the valuation of a home should carry a higher risk weighting.
Industry spokesmen confirmed this week that this move has been on the cards for some time, but no finality has been reached with the Reserve Bank.
Risk is reflected in the interest rates you pay, so though the picture is still unclear, it could mean that banks would have to charge a higher interest rate on a portion of your home loans in the future.
At the moment, the rough calculation for how much of a home loan you can afford to take is that if you earn more than R3 500 a month, your mortgage repayment should not be more than 30 percent of the income available to service the loan. If you earn less than R3 500 a month, the guideline is about 25 percent.
This means if your mortgage gets more expensive, you will only qualify for a smaller loan.
Leon Booysen, Absa's assistant general manager, mortgage loans, said if this move was implemented, it would not only affect banks' lending activities but also hurt the property market. Since this has been looming for some time, Absa has already started to tighten its lending criteria.
The Reserve Bank expressed unease about banks extending home loans to finance consumer spending and also extending home loans up to a higher proportion of the value of the underlying property.
In the old days, when building societies dominated the home loan market, they were not able to lend more than 80 percent of the value of a property so if your house was worth R200 000 they could only lend you R160 000.
As the banks entered the property market, they were not limited by the same rules. They have been lending up to 90 or even 120 percent of the value of a property.
Mortgages are a fairly competitive area for the banks and although the basic mortgage rate tends to be the same, the banks will negotiate down from that by up to three percentage points depending on your status.
David Harrison, general manager at Nedcor, said when a bank lends above 80 percent of the value of a house to a mortgage loan applicant the decision is made on criteria such as the individual creditworthiness of the client, and can be on the basis of a personal loan, rather than a mortgage loan.
One of the areas where consumers might be tempted to use a home loan for purposes other than a home is where they have an access-type bond, which is one where you can borrow up to the limit of your original loan after you have repaid some of the capital.
Duncan Reekie, divisional general manager home loans at Standard Bank, which offers the "Access Bond" that has become a household name (although other banks have similar products) said Standard Bank has never promoted its Access Bond as anything other than a money management tool.
Access bond holders are recommended to put spare capital into their access bonds, temporarily if necessary, to reduce the interest they are paying on the loan.
However, the banks' spokesmen doubted whether the Reserve Bank would crack down on access bonds too.
"We undertook research about a year ago into this product," Booysen said. "We found that even though we offer the facility, it did not escalate the overall debt on our mortgage loan book."