Johannesburg — HOMEOWNERS continue to struggle to meet mortgage repayments because of the prevailing credit crunch. The FNB residential property barometer, a survey of the property market based on data from local estate agents, indicates that in the fourth quarter of last year most homes were put up for sale by homeowners trying to downscale due to financial pressure.

The survey revealed that a total of 26% of homeowners across all income brackets were opting to sell because mortgage repayments were becoming too difficult to meet.

The recent interest-rate cut is good news and will provide at least some relief to over-burdened homeowners.

However, there are ways of easing the stress of bond repayments. Mark Beckett, CEO of Bond Choice, says: "Approach your bank as soon as you realise you are in financial difficulty. The banks want to assist clients and consider it a last resort to repossess homes. "Running away from the responsibility only compounds the problem in the future." He says that extending the home- loan period from 20 to 25 or even 30 years will help to reduce the monthly instalment amount.

"When you are financially more stable you can reduce the repayment period to minimise the amount of interest paid on the property during the life of the bond." He advises also to consider downgrading vehicles, especially if they are on hire purchase. This will provide additional capital for bond repayments.

Beckett says sacrificing luxuries can limit personal expenditure. Eating in rather than out and hiring a video as opposed to going to the cinema can help to save money to contribute to bond repayments.

"Consider the possibility of taking in a tenant, even if for a short period of time. If your house can be divided easily by erecting a drywall or blocking off an area so that a section can be rented out without upsetting the privacy of either party, it could contribute to the bond repayments. Interest payments, rates, taxes, levies and maintenance are offset against the rental income and proportionately deductible off your income tax."

Since the inception of the National Credit Act in June 2007, banks have had to apply stricter credit lending controls, especially to home loans.

Bond Choice data indicates that as a result only about 45% of bond applications are being approved, against more than 70% a year or so ago. This, says Beckett, is despite bond origination consultants tightening up their applications to the banks so that dubious cases are not put forward.

"Bond Choice recognises the prudence of this legislation in shielding SA from the worst of the global credit crunch by reining in people's ability to live off credit and over-extend their commitment. For that, SA -- and thus the industry -- must be grateful, because by generating a system as flimsy as a house of cards the long-term implications for the economy are dire, as the US, the UK, Europe and Japan are now discovering."

Ooba has called on Finance Minister Trevor Manuel to push up the transfer duty threshold from R500000 to R1m.

Saul Geffen, CE of ooba, says that with the banks' tighter lending criteria on home loans there are fewer buyers qualifying for loan amounts they apply for. "When banks do grant loans they are demanding deposits of up to 30%, depending on the size of loan. On top of the deposit buyers must then pay transfer duty (a tax), which means buyers need to have a lot of cash on hand. Increasing the transfer-duty threshold would make it easier for consumers, particularly first-time buyers, to enter the property market."

In 2006 the threshold at which transfer duty on fixed property becomes payable was increased from R190000 to the current R500000. Geffen says that three years on it should be raised again.

"In early 2006 the average property price in SA was about R700000. Now it is just shy of R1m, so the threshold also needs to recognise this bracket-creep effect and ease the tax burden on South Africans at a time when they need it the most," says Geffen.

He is positive that more buyers will enter the market this year with the continued drop in interest rates, and sees next year as a far better year for the South African property market.