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Originators help with 70%+ of loans

Well over 70% of all new home loans are facilitated via originators.

This is according to Rhys Dyer, chief operating officer of ooba (formerly MortgageSA), who adds that originators have been responsible for improving interest rate concessions across all home buyer consumers (including first-time buyers), with rate concessions of up to 2% being routinely achieved at the peak of the market.

"For every 0,5% additional concession to prime, the saving on an average size home loan of R1m represents an interest saving of R86,750 over the life of the standard 20-year bond," he says.

Originators approach multiple lenders on behalf of the consumer.

"Mortgage origination is a pure outsourcing model for the banks. Origination is a more cost-effective alternative for the banks to them having to employ their own sales and distribution staff," says Dyer.

Since 2008 the property market has experienced a slowdown due to a combination of factors, which include the high price of debt, the introduction of the National Credit Act (NCA) and banks tightening up their lending policies.

This has been exacerbated by the sub-prime crisis, the global liquidity crisis that followed this and the current global economic slow down.

"South African property owners have been hit hard by the recent slowdown in the industry. The very restrictive lending policies of the banks have compounded the troubles in the housing market."

"But there is hope on the horizon. Interest rates are already 2,5% off their peak of 2008 and further interest rate cuts are expected well into 2009. With improved affordability for consumers, the property market is expected to start recovering by the end of the year.

"The current downward interest rate cycle is a great relief to all South African homeowners," says Dyer.

"The latest cut by the Reserve Bank on 24th March of 1% will save homeowners an additional R730 a month on a R1m home loan over a 20-year period."

Original Article on Property24.com

Author / Publication: Property24.com
Date Added: 20 May 2009