Mortgage originators saving homeowners R100m every month

The mortgage origination industry is “saving” South African homeowners about R100 million or more every month and this would increase further as the concept gained even greater popularity among consumers, according to Jan le Roux, chairman of BetterBond’s holding company the PA Group.

BetterBond is the country’s largest mortgage origination company having recently reached a monthly processing in homeloan grants of R4 billion.

The savings, according to le Roux in his address to Durban estate agents at a recent Estate Agency Affairs Board (EAAB) Imbizo in the city, was a direct result of the mortgage originators ability to “shop” home loan application with all the major banks for the most suitable end user package and this also included the most favourable interest rate.

Canvassing the banks for best rate by an individual, while possible before origination, had been extremely cumbersome and time consuming. This had involved submitting new applications to every bank with supporting documentation, but in reality the banks at that time rarely deviated from offering the variable rate of the day.

The current average home loan rate was now slightly more than one percent below the current variable rate as a result of banks having to compete for every homeloan.

“A bank knows today that every applicant has the capacity through a mortgage originator’s services to compare rates and other factors simultaneously so if they want the business they have to come in hard and fast with their best rate.”

Le Roux said the more than R100 million monthly saving was based on the R10 billion a month that banks were granting in new home loans every month. He also noted that the servicing and processing of home loan applications and end user service had improved substantially since being taken over by mortgage originators, who now accounted for about 60 percent of all new home loans.

The advent of mortgage origination had also through the payment of introductory commissions been beneficial to estate agents. However, he reminded estate agents that while such commissions were perfectly legal and in keeping with world trends they still had a legal responsibility in terms of the Estate Agents Act to ensure they always acted in the best interests of their client.

Turning to real estate industry empowerment le Roux urged the industry and other originators – so far BetterBond is the only originator to have created an equity deal with BEE partners – to promote industry transformation. Apart from “being the right thing to do” le Roux believed BEE partnerships offered meaningful long-term economic advantages to its shareholders.

FNB HomeLoans were financing the acquisition of a 26% interest in the PA Group Limited, by the empowerment vehicle New Deal Trust aimed specifically at ensuring sustainable empowerment within the local real estate industry.

Le Roux said that by and large white estate agencies had neglected the potential of townships and black estate agents. With the exception of a few agents of colour successfully servicing clients in white areas, empowerment in the industry, particularly in the mortgage origination sector, was still sorely lacking.”

The New Deal Trust, with Le Roux; Bulelani Ngcuka, chairman of Amabubesi Investments and former head of the National Prosecuting Authority and the Scorpions; and Hlubi Mazwai as trustees, would in time dispose of its 26% interest to a growing community of historically disadvantaged estate agents in an innovative and affordable way.

Article by MyProperty (http://www.myproperty.co.za/news_item.aspx?news_ref=3871)


Gold price boosts Welkom property market

The gold price is flying along above $500 an ounce - and it's all good for the property market in the Free State mining town of Welkom.

Says Andre Van Eck of Homenet Welkom: "Our property market is very sensitive to the gold price for obvious reasons and that dependency has counted against us for much of this year.

"It has been essentially a buyers' market, due largely to further retrenchments from the gold mines. However, the situation has changed virtually overnight with the gold price reaching $500 an ounce and this opens the door to opportunities for those with foresight and a little courage."

Right now, he says, the best of these opportunities are for 'buy-to-let' investors aiming at the student market (Vista University is based in the town) and for retirees.

With regard to the latter, Welkom is attractive because it has a well-developed infrastructure and a good climate - as well as extremely competitive home prices. "For example a two bed-room townhouse in a modern security complex can be obtained for R150 000 compared with say, R500 000 to R600 000 in one of the bigger centres.

"Similarly, a two-bedroomed flat will cost you somewhere between R110 000 and about R200 000 in Welkom, while freehold three bedroom homes are still available here from around R150 000.

"But of course properties at these prices are bound to be purchased quickly, especially if the gold price holds at around current levels, and that suggests there are also genuine opportunities for developers in Welkom. Indeed, as a measure of my confidence in this market I am currently personally investing in a 12-unit townhouse development."

Article by: MyProperty