Category Banking

Absa offers more to its mortgage customers

07 September 2009 Absa

Absa has become the first bank to provide relief to low income earners by offering 110% bonds with a monthly income up of to R11 000.

Luthando Vutula, Managing Executive of Absa Home Loans, says: “The turn in the economic cycle is becoming evident and as such we need to review our customer offerings.

“Although the South African economy still finds itself in recession after contracting for three consecutive quarters up to mid-2009, It is important to note that to date, the interest rates have beenreduced by 500 basis points (bps) since December 2008 and are projected to drop by a further 50 bps later in the year.

“Essentially this means that consumers are experiencing relief and with lower inflation and household payments there should be a notable reduction in loans in arrears. In light of this, and a slight improvement in property market, our loan to value caps will be aligned with the prevailing market conditions.

“As a responsible lender and leaders in mortgage, we will continue to weigh up the consequences of our decisions and the impact these could possibly have on our customers.”

Absa is also providing up to 95% to Absa customers who need a bond up to R1.5 million if they use Absa internal channels, and 90% if they use external channels e.g. Mortgage originators.

Houses from R1,5 million to R2,7 million will still requires a 10% deposit and houses more than R2,7 million a 15% deposit.

“Absa continues to be a responsible lender and was the first bank to adjust our lending criteria. We are also the first bank that offers 110% bonds to the affordable housing market.”

Vutula says it is important to note that the normal lending criteria will still be taken into account.“We encourage all of our customers to remain astute and discuss their home loan needs with us.

“It is only through meaningful interviews and accurate affordability analysis that we will be able to establish a sound needs analysis and offer the best solution,” he notes.

Residential Repossessed Assets (RRA) and Absa distressed properties will also be available for customers to consider. Absa customers will get 100% on these home loans in order to make it possible for more of our customers to own their own homes.

At the beginning of the year Absa reviewed and revised all of its agreements with Mortgage Originators. These agreements remain unchanged.

Vutula says, “We value our business partnerships and will honour our commitment in the interest of serving our customers better. Mortgage Originators remain a choice of channel for the customer.

“We also continue to provide value add products such as HomeBuy and One Call solution which provides measurable savings to homeowners and minimises as many of the hassles typically associated with homeownership.”

Despite lower interest rates, the economy is expected to remain under a lot of pressure until the end of the year, which will continue to impact employment, household income and the property market.

In view of these developments Vutula encourages consumers to keep expenses under control and looking to buy properties that are affordable, based on their financial position.

“When there is extra cash available it’s easy for people to be tempted to splurge, however, let’s encourage our customers to remain prudent and save a few rands for that much talked about “rainy day”. It’s the right thing to do. We continue to encourage home owners to deposit surplus cash into their mortgages,” concluded Vutula.

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