South African banks mull how to avoid debt defaults when pandemic relief ends

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South African banks mull how to avoid debt defaults when pandemic relief ends

A gauge of South African lenders ranging from the Standard Bank Group, the largest lender in the southernmost tip of the world, to Investec, have been seeking for options to avoid debt defaults when the pandemic-led relief runs out, industry officials familiar with the condition had unveiled late on Friday.

In point of fact, over the recent months, the S. African lenders had supported their customers with pandemic relief loans including payment holidays up to three months and some other banks such as Capitec had offered extensions and a refund of interests accumulated during the forced closure period, however, a number of lenders were quoted saying that they were worried about the fiscal fallouts of the pandemic which would likely to lead an upsurge in the unemployment rate of the fiscally distressed nation.

Mortgage makes up 59% in debts considered as risk

Meanwhile, as the S. African lenders were looking to a swathe of options to avert the fiscal fallouts of the pandemic including a wave of property eviction that would likely to affect the housing market prices and eventually weigh on the overall economy, the Banking Association of South Africa was quoted saying in a statement on Friday that the mortgages were amounting to nearly 59% or $28.88 in bad debts, considered having been at risk.

Besides, according to the industry executives, the possible ways out of a large-scale fiscal chaos in the borrowing industry could include leveraging the equities in properties despite the risk of a wave of home eviction, however, the executives had also added that the use of pensions or a term extension on mortgages could reduce the figure of home evictions.

Apart from that, executives of Nedbank and Standard Bank were quoted saying that the debt consolidation on home loans could be a possibility, while term extensions could be considered based on the clients’ fiscal circumstances.