Home Loans and Insurance
Over the past year the Sa Home Loan industry has become increasingly competitive as a number of new home loan providers have entered the local market.
Sanlam is one of those to have recently begun offering home loans in South Africa and the well known insurance giant has already firmly established itself in this industry.
During the past year Sanlam Home Loans has built up a home-loans book of R1,5 billion and at present the company is granting home loans to the value of approximately R300 million a month.
Previously only large Banking institutions were able to offer mortgages in SA, but South Africans can now benefit from a more level playing-field in the local home-loan industry than in the past.
Similar to SA Homeloans (SAHL), Sanlam employs the Securitisation model as a funding mechanism and as a result are able to pass the cost benefits on to the client.
Piet van der Walt, chief executive of Sanlam Home Loans explains, “As Sanlam Home Loans relies on Sanlam’s distribution network of financial intermediaries, its does not require an expensive infrastructure to handle home loans. The securitisation model in terms of which the company obtains its money directly from the money market also offers Sanlam Home Loans immediate access to lower funding rates. These cost benefits can be passed on to clients directly in the form of competitive interest rates.â€
The marketing of home loans via insurance channels is a new concept in South Africa, but
Van der Walt believes that the sale of a home loan by a financial intermediary benefits clients in that their financial affairs and circumstances are evaluated holistically. The lower the client’s risk profile, the lower the lending rate that can be offered.