Human Settlement Minister Tokyo Sexwale. Photo: Simphiwe Mbokazi

Human Settlements Minister Tokyo Sexwale is engaging some South African commercial banks whose lending practices are said to be discriminatory, in contravention of the Home Loan and Mortgage Disclosure Act.

Sexwale confirmed this week he was “not comfortable” with the lending practices of some banks after reading reports that banks were not complying with the act.

These reports enable the department to monitor discriminatory lending practices.

However, banks denied the allegations and estate agents approached for comment said they were unaware of any discriminatory lending practices.

Sexwale said some banks were not giving sufficient attention to de-racialising the property market, were tied to a particular market and never got involved in other markets, or only granted loans to certain types of people.

Widows and single people were discriminated against and the government had to come in and assist because banks never lent to these people, he said.

Sexwale earlier this year threatened to “name and shame” banks that acted against the spirit of the act.

But Sexwale this week declined to identify the culprits, stressing that he did not want to go into any detail about the problems that had been identified because he was interacting with the banks.

Chris Vick, a special advisor to Sexwale, declined to comment on how many of the major commercial banks were indulging in discriminatory lending practices because the department still had to get the reports for this year.

Bafana Sibeko, an estate agent for Seeff Properties in southern Johannesburg, which includes Soweto, said most of his clients were black people and credit bureau listings were the major reason for home loan applications being declined.

Sibeko was not aware of banks practising “red lining”, which involves turning down loan applications in a specific area irrespective of the creditworthiness of the applicant. The act outlaws the practice.

“They (banks) do lend right into Soweto and sometimes give 100 percent loans, especially Standard Bank.

“It’s difficult to get loans in Soweto from First National Bank (FNB). If they give loans, they mostly give 90 percent and the house must have a bath and toilet inside,” he said.

Pam Golding Properties Group national sales executive John Herbst said there was no discrimination by banks in terms of lending but there was the “commercial practice of risk management and high loan to values in areas that are less desirable”.

He said the mantra of banks today was one of “quality clients and quality properties” and they had a very selective lending process. “Is it discriminatory? No. The custodians of the loans divisions of the various banks outside of FNB are all managed by very committed and skilled black professional people. I can’t buy into the concept that they will not lend to black consumers.”

Sexwale said that without the mortgage disclosure act, the private sector would determine where money was spent instead of addressing the critical needs of the people.

The act had punitive measures that he had not used and “hoped not to”. But Sexwale said the act forced him to be an “an activist minister” and he wanted to become “more activist without being punitive”.

Sexwale said some banks were in “comfort zones” and doing what they had previously done and he wanted to “nudge” them to think about doing things differently.

He expected “to see a change in behaviour”.

Ross Linström, a Standard Bank spokesman, said it had the biggest market share of all the banks in the affordable housing market and did not have any discriminatory lending practices.

“All our applications are judged on the assets being financed and the affordability of the customer, which is in line with the requirements of the National Credit Act.”

Pat Lamont, the general manager at Nedbank Home Loans, said Nedbank supported the building of non-racial suburbs and believed in its non-discriminatory lending practices and played a significant role in this industry process.

Jan Kleynhans, the chief executive of FNB Home Loans, said the bank was committed to making financial assistance available in the form of mortgage loans to all South Africans irrespective of race or gender.

“We do not discriminate on any demographic basis and consider all loan applications purely on the basis of risk and return where all applications are considered purely on the economic merits.”

Attempts to obtain comment from Absa were unsuccessful.