Mortgage Originators Do Us A Favour

Although interest rates were reduced, the borrowing rates that consumers get on their home loans have nevertheless been coming down because of growth in the local mortgage origination business.

The phenomenal growth in the mortgage origination industry — where a company seeks the best home loan rate from the lending institutions on your behalf — means that homebuyers are now enjoying bigger rate concessions on their home loans.

Research shows that banks are offering 30% higher concessions than they were last year because of the power of the mortgage originators, who are negotiating favourable concessions with the lending institutions.

The average rates that leading mortgage originators now obtain for consumers are well over 1% below prime.

Even on a very conservative calculation of concession at 1% below prime, this translates into a savings of over R15-billion that goes directly into the pockets of South Africa’s homebuyers.

Although concessions have been growing, there is always room for negotiation.

Between 60% and 70% of all new home loans are sourced via mortgage originators at present.

This has given originators much more bargaining power with the lenders — and this in turn is then passed on to the consumer.

Experience shows that it really does pay to have an expert shop around on your behalf for the best deal.

Negotiating rates is vital and can give you a substantial saving on interest payments over an extended period on what is most likely the single biggest investment most people will ever make.

Good mortgage originators have their fingers on the “bank-lending pulse” and know how and where to negotiate the best rates.

They will also know the types of buyers that each bank favours.

It may sound surprising, but not all banks are scrambling to get all home buyers’ business — and different rates are offered for different types of buyers and different types of properties.

A credible full-service mortgage originator will enable people to secure a better home loan deal.

The lower the rate of interest you get on your mortgage loan, the smaller your monthly repayments and thus the more expensive the property you can afford. This is vitally important in the current high-priced property market.

Article from: (Business Times Money)