• Property: it lives!
• Evidence of upturn mounts
• Property is (nearly) back

Throughout South Africa there is now clear evidence that residential sales are picking up at a satisfactory rate, says Rob Lawrence, Manager of Rawson Finance, a mortgage origination company that formed just on 18 months ago.

"At Rawson Finance," said Lawrence, "we have seen a 60 percent increase in bonds granted month-on-month, from June to September. What is more, this, I am told, is not exceptional – others have had similar if not quite such spectacular increases."

For the first time in a long while, said Lawrence, there have been regular applications for finance in the upper middle and upper value brackets.

Demand strongest at the lower end

"Demand is still strongest at the lower middle end of the market (i.e. from R700 000 to R1.2-million), but the upturn in the higher categories, where until recently most buyers either were paying in cash or putting down deposits larger than 50 percent, is encouraging."

Asked to what he attributes the improved conditions, Lawrence said that the credit crunch had built up a huge backlog of potential homebuyers who were now flooding back into the market.

"Banks have to lend in order to make profits. After a prolonged period of almost no lending, the 'green shoots' of the recovery have encouraged banks to start actively canvassing for mortgage loans once again and nowhere is this more evident than in Standard Bank’s decision on 28 August to once again offer the major bond originators contracts.

Doing without originators is suicide

"Standard Bank had originally decided to do without originators. This might have made sense when cash was exceptionally hard to come by, but now that the market is loosening up and the banks are again competing for loan applications it would be suicidal."

Seventy percent of all bonds, says Lawrence, have traditionally been processed by originators. Given that an enormous amount of mortgage knowledge is possessed by originators, this percentage will be maintained, or even grow.

"The difference for the banks now is that the commissions are some 50 percent lower. Although consumers have never paid these commissions and still do not, this will work to both the banks’ and the customers’ advantage, in that we would expect to see some of these savings be passed on to the consumer, via lower bank charges."

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