The impact of the National Credit Act on residential mortgage lending in South Africa

Abstract

The National Credit Act (NCA) was promulgated and implemented on 1 June 2007. The purpose of this research study was to outline the residential mort-gage market in South Africa in the context of the NCA and to determine how residential mortgage lending under the new NCA was regulated. The purpose of the NCA was to remove the many unfair practices, inappropriate disclosure and anti-competitive practices from the market and to achieve honesty in the credit market. Low-income groups were held back because they could not gain access to formal finance to build or improve houses or supplement housing subsidies to get bigger houses. This study applied the quantitative research design using time series secondary data. Registered data on monthly residential mortgages was obtained from Lightstone Property for the period January 2001 to August 2011. Secondary data was collected from the BA900 of the SARB to see how many loans were approved and rejected between 2008 and 2014. The statistical analysis techniques used in this study were t-tests, descriptive statistics, trend analysis and correlation analysis. It was found that the NCA had a positive effect on the residential mortgages in SA.