Financial strain fuels surge in home repossession cases

Households are increasingly battling to keep up with their monthly bond repayments as rising living costs, unemployment and stagnant income growth continue to squeeze already strained budgets.

Figures compiled by the Banking Association of SA, representing about 95% of the country’s retail banking market, show that mortgage accounts in default increased from 112,874 in 2023 to 118,698 in 2024.

The National Financial Ombud Scheme said it dealt with 774 home loan disputes in 2025, which had risen to 8.09% compared to 7.17% in 2024.

The Johannesburg high court recently ruled against a couple who defaulted on their 2006 home loan and stopped repaying it in September 2014.

Due to a decade of non-payment, the debt of approximately R717,000 ballooned to R1.66m.

Judge Thifhelimbilu Mudau said the respondents failed to address the substance of the debt itself and granted the lending bank the order to auction the property.

“They have not responded to the notices. They have not referred the matter to a debt counsellor. They have not applied for debt review. They have not made any arrangement to bring the payments up to date,” Mudau said.

FNB spokesperson Apiwe Mjambane said consumers have been under sustained financial pressure in recent years.

“Persistently high unemployment, rising living costs, increasing municipal tariffs, energy-related challenges, and broader pressures in the property market − collectively these factors make it increasingly difficult for many consumers to meet their monthly financial obligations,” she said.

The Banking Association of SA said successful sheriff’s auctions also rose from 1,270 properties in 2023 to 1,594 in 2024.

Toni Anderson, head of home services at Standard Bank, said early intervention remains one of the most important ways people can avoid losing their homes.

“Early communication enables us to explore a range of solutions that we tailor for each client based on their circumstances. Where possible, we always aim to help our clients retain their homes until they can restore their financial position,” he said.

‘Last resort’

Mjambane said: “[Sales in execution] are undertaken by FNB only as a last resort, once all other available avenues have been fully exhausted. It generally takes approximately three years from the point of default before a property reaches a sheriff’s auction.

“During this period, the bank works closely with customers to identify solutions that place them in the best possible position,” she said.

FNB said it offers several interventions, including payment holidays, interest-only arrangements and reduced fixed instalments.

It also offers a Quick Sell Programme, allowing distressed homeowners to voluntarily sell their properties on the open market before legal proceedings escalate.

Tsietsi Mahlasela, senior media relations manager at Absa, said while recent interest rate cuts provided some relief, the outlook remains uncertain.

“The outlook has become more challenging in 2026 due to interest rate increases and broader macroeconomic pressures, which may place additional strain on household finances and potentially impact future default trends,” he said.

Absa offers distressed customers support through temporary payment reductions of up to 75%, extended repayment periods, arrears restructuring, and property sale assistance.

Prof Rashri Baboolal-Frank of the University of Pretoria’s procedural law department said homeowners should never ignore early warning signs from banks.

“The letter of demand for payment in terms of the statutory notice that is sent in terms of the National Credit Act comes from the bank illustrating the default of the debtor,” she said.

“Even before then, sometimes the bank even calls the debtor about delayed payments, and if the debtor knows that they will fall behind in payment, they should contact the bank immediately to do payment rearrangements.”

Baboolal-Frank said there are multiple stages before a property reaches foreclosure. “Consumers need to negotiate with the bank as soon as possible,” she said.

Sowetan