Bond originators will have to become more skilled and more effective in the coming year if they are to be successful in keeping the flow of mortgage loans to the public at a reasonably satisfactory level, says Bill Rawson, Chairman of the Rawson Property Group.
“The end of September review of homes loans by Absa,” says Rawson, “has shown that the total value of outstanding balances in the South African household sector has dropped by R2,9 billion to R1,394 billion. This figure, it is clear, was largely due to unsecured loans, overdrafts, credit cards, general loans and advances but, regrettably, mortgage loans were also among the credit categories to experience a slowdown. By Absa’s calculations they grew by only 2,2% year-on-year.”
Rawson says that apart from lower overall economic growth and inflation – both of which have impacted on the household consumer – Absa have revealed yet again that lending has been severely curtailed by “a significant number of credit-active consumers having impaired credit records.”
This factor, perhaps above all, say Absa, has affected their appetite for risk and led to a tightening up in the lending criteria at virtually all banks. With high interest rates expected towards the end of this year and in 2015, growth in credit, therefore, say Absa, is highly unlikely.
In the circumstances, says Rawson, good bond originators have an exceptionally important part to play in helping prospective home buyers to get to grips with their financial situation. This, he says, will involve teaching them to understand the banks’ loan criteria and rectify impaired credit records. It is also their responsibility to see that their loans are pitched at the right levels, thereby increasing their chances of success.
Certain Rawson Property Group franchises and other property marketing operations, says Rawson, have, with the help of good bond originators, been successful in coaching prospective home owners and several are now successful with over 90% of their bond applications – as against a national average of around 65%.
“Rectifying impaired records and aligning oneself to the banks’ requirements,” says Rawson, “can take anything from six to 24 months. However, it is an exercise worth doing, particularly as in the volatile economic situation in which South Africa now finds itself, property owners will be in possession of one of the more stable asset classes.”
For further information contact the Rawson Property Group on (021) 658 7100.
