banks origination overview presentation august 2011

8/4/2019 Banks Origination Overview Presentation August 2011

1/17


2/17


3/17

Origination Overview:

Application volumes for July showed a 35% year-on-year increase.

Value of granted homeloans in July was 23% higher year-on-year and this

should trend stronger as banks continue to relax their lending criteria and

economic conditions improve.

Bank decline ratios are 1% lower year-on-year.

Effective bank approval rates are currently tracking on 64%.

Ratio of applications declined by one bank, granted by another remains at 23%,

indicating the opportunity that prevails to secure an approval from another bank

on applications initially declined by one bank.


4/17

Origination Overview: (Continued)

Banks are continuing to relax their credit policies and deposit requirements and

are now once again offering 100% bonds.

Number of buyers purchasing property with a 100% bond requirement has more

than doubled since September 09. Currently 45% of all homeloan applications

processed are for 100% bonds.

Banks are adopting a cautious approach to approving 100% bonds by applying

stricter credit criteria. Only 38% of 100% bond applications are approved and

42% of these approvals are subject to deposits.

Applications with deposits are securing higher approval rates than 100% bond

applications.

90% of ooba applications are granted within 5 days of submission.


5/17

Bank Loan to Value Criteria:

*

Maximum LTV % based on the Lower of purchase price or bank valuation of

property

VACANT LAND All Loan Amounts = maximum 60%

STD Current Account Holders

All loan amounts = maximum 75%

Non STD Current Account Holders

Loan amount R 1m = maximum 75%

Loan amount > R 1m = maximum 65%

No Loans against will be considered All Purchase prices = maximum 60%

RESIDENTIAL

PROPERTY

(Including

Building Loans)

Completed Property and building loans

All loan amounts = Max 70%

STD Current Account Account Holders

Loan Amount R1.5m = max 100%

Loan Amount > R1.5mR2.5m = max 90%

Loan Amount > R2.5 m = max 80%

Non STD Current Account Holders

Loan Amount R2.5m = maximum 90%

Loan Amount > R2.5 m = maximum 80%

SA Citizens Living and Working Abroad:

All Loan Amounts = maximum 70%

Nedbank Retail Customers:

Loan Amount R1.5m = max 100%

Loan Amount >R1.5m R3m = max 90%Loan Amount >R3m = max 80%

Non-Nedbank Retail Customers not subject to

Mandatory Industry Submission pending

Timeframes:

Loan Amount R3m = max 90%

Loan Amount >R3m = max 80%

Non-Nedbank Retail Customers subject to

Mandatory Industry Submission Pending

Timeframes:

All Loan Amounts = Max 60%

The loan amount including the Initiation Fee

may not exceed the above maximum ltv

parameters.

Only Self- Employed Individuals who have aPrimary Business Relationship with Nedbank

will be Considered

Nedbank Properties

In Possession = maximum 100%

A. C ompl et ed P rope rt y:

Purchase price R2.0m

Salaried Applicant = max 100%

Self-employed Applicant = max 95%

Purchase price > R2.0m R3.0m



Purchase price > R3.0m



A. Building Loans:

All purchase prices = max 85%

Same guidelines are applicable for FNB ONEACCOUNT

FURTHER LOANS

A. Vacant Land = Maximum 60%

B. Completed Property

Loan Amounts R1.5m = maximum 90%

Loan Amounts > R1.5M = maximum 85%

C. Building Loans

Loan Amounts R2.7m = maximum 80%

Loan Amounts > R2.7m m aximum 70%

Same guide-lines for new loans would be

applicable.N/A Same LTV guidelines as above apply


6/17

Bank Loan to Value Criteria:

APPROVE

D

COLLATER

AL

SECURITY

**

Z573 (Gov/Municipal Guarantee)

OR

ABSAApproved Group Scheme

OR

ABSA Fixed Deposit (100% value)

OR

Other banks Fixed Deposit (90% value)

OR

Life Policies with surrender value (100% of

free S/V no premium debt)

OR

Covering bond over un-bonded

residential property (80% of

ABSA

value ofproperty)

If collateral is provided by a 3rd party (i.e.

other than the applicant), it will need to be

supported by a limited suretyship from the

3rd party in favour of the applicant to the

value of the security provided

Z573 (Gov/Municipal Guarantee)

OR

Covering bond over an un-bonded

residential property

(owner MUST be applicant)

Nedbank Fixed Deposit

OR

Covering bond over an un-bonded

residential property.

No forms of collateral security have been

approved.

COST

INCLUSIV

E LOANS

Only offered on the My HomeProduct

(affordable market)

Only available for First Time Homebuyers

who apply directly to Standard Bank and on

the Affordable Housing product

No cost inc lus ive p ro du ct avai lable No cost inc lu sive p ro du ct available

DISTRESS

ED SALES

Summit Listings has the exclusive origination

contract for ABSA Distressed Sales.100% LTV availa ble for purchasers of

Standard Bank Distressed Sales through all

channels

100% LTV availa ble for purchasers of

Nedbank Distressed Sales through all

channels

Purchasers of FNB Distressed Sales must apply

directly to FNB for finance.

SA

CITIZEN

WORKIN

G

ABROAD

LTV 70% LTV 70% Nedbank Retail Customers Only

LTV 90%

LTV 50%

NON-

RESIDENT

CLIENTS

WITH

WORK

PERMITS

LTV 50% - Individual Application

LTV 70%- if joint app with SA citizen

(up to R2.7mil)

LTV 50% N/A LTV 50%


7/17

Affordable Lending Guide-Lines By Bank:

Special Notes: Nedbank currently does not have an Affordable Lending Product. Ithala Bank will only grant loans where the property is situated in KZN.

Special Notes: Nedbank currently does not have an Affordable Lending Product. Ithala Bank will only grant loans where the property is situated in KZN.

Bank Product Name: My Home Affordable Housing Smartbond KZN Only - No specific productname

Maximum Income Qualifying

Criteria:

Single / Joint Monthly Income:

Maximum income of R15 498

Single / Joint Monthly Income:


Single Applicant:


Joint Applicants:

Combined income may not exceed R16 000

No maximum income limit

Maximum Installment toIncome Ratio

All income brackets:Based on Affordability

All income brackets:Maximum 40%

All income brackets:Based on Affordability

All income brackets:Maximum 30%

Maximum Loan to Value

Ratio70%

100% - Non First-Time Buyer

104% - First Time Buyer100%

100% - Maximum Loan Amount

of R500 000

90% - >R500 000 R800 000

80% - Loan Amount greater

than R800 000

Vacant LandNo No No Yes

Maximum Loan to Value 60%

Maximum Loan AmountMaximum in terms of affordability and LTV

criteriaMaximum in terms of affordability Maximu m in terms of afford ability Maximum in terms o f affor dab ility

Life Assurance CompulsoryYes Yes Yes Yes


8/17

Credit Market Conditions:

Banks appetite for lending is gradually recovering and increasedcompetitiveness for homeloan business amongst banks is becomingevident.

Bank approval rates are still inhibited by consumers high debt toincome ratio and impaired credit records.

Although banks are competing on pricing, average homeloan interestrate concessions are lower year on year due to the higher costs offunding.

Banks are recording a slower growth in the number of non-performingloans.

Property market growth has moderated in 2011 due to the slowereconomic growth trend. July 11 House Price Indices are showingslow and, in some sectors, negative price growth.

Credit Market Conditions:


9/17

100% Bond Statistics

Huge increase in 100% bond applications:

100% LTV 18%

90% - 99.9% LTV 40%

80% - 89.9% LTV 18%

70% - 79.90% LTV 9%

60% - 69.9% LTV 6%


10/17

Bonds Approval Analysis: 100% LTV

Only 38% of 100% bonds submitted are ultimately converted

100% LTV 58%

90% - 99.9% LTV 35%


11/17

Bond Approval Analysis:80% -


12/17

ooba has highly skilled consultants who prepare, motivate and

package applications for maximum chance of approval

ooba consultants have access to senior ooba regional

management to escalate complex applications for maximum

chance of approval

ooba consultants also have access to a dedicated senior head

office team who have direct access to bank credit to escalate

complex applications for maximum chance of approval

ooba Offers Estate Agents a Better Chance of Bond Approval


13/17

Absa Overview:

Currently declining 46% of applications submitted

40% of applications declined by Absa are granted by another bank/s

75% of loans submitted to Absa are granted within 5 days

Julys results reflect that ABSAs pricing in the lower loan to value

bonds was more competitive


14/17

Nedbank Overview:


30% of applications declined by Nedbank are granted by another bank/s

95% of loans submitted to Nedbank are granted within 5 days

Julys results indicate that Nedbanks pricing was uncompetitive


15/17

FNB Overview:


28% of applications declined by FNB are granted by another bank/s

88% of loans submitted to FNB are granted within 5 days

Julys results reflect that FNBs pricing was the most competitive


16/17


9% of applications declined by Standard Bank are granted by

another bank/s

92% of loans submitted to Standard Bank are granted within 5 days

Julys results reflect that Standard Banks pricing remains

conservative

Standard Bank Overview:


17/17

General:

Banks are focusing on:

Bad Debt Limitation

Cost ofFunding

Profitability

Quality of Applications

Retention of own customers business

Reducing NTUs

Processing Costs efficiencies

Fraud Prevention

Streamling Bond Conveyancing Panels

banks origination overview presentation august 2011

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