Real Estate Investor Magazine South Africa April/ May 2020 | Page 24

FINANCE
The best of
borrowed
capital
Buying property in a borrower’s market
TIM AKINNUSI
Looking to buy a home? The good news is that thanks to increased
competition and lower interest rates, it’s a borrower’s market.
a further 25 basis points (bps) off the repo rate, bringing the
prime interest rate to 9.75%.
Encouragingly, the prime interest rate of 9.75% is the lowest
interest rate since 2015 and has been widely welcomed,
particularly by the property sector, as the cost of borrowing is
now at its cheapest.
The cumulative effect of each reduction by 25bps adds up
and has given South African borrowers some much needed
respite. SA Reserve Bank Governor, Lesetja Kganyago also
hinted at a further rate cut later in the year 2020, which is a sign
to be optimistic about in the future.
Traditional banks are being digitally disrupted and therefore
have to think differently about how to add value to their
customers, in a rapidly transforming digital environment. This
makes 2020 a great time for customers to consider buying
homes.
To help customers take advantage of a borrower’s market,
various online market place including MortgageMarket have
and continue to enable customers through their marketplace
offering to access the information needed in order for an
eased access to reputable money lenders and home/ property
traders I.e. real estate agents.
T h e i m p o r t a n c e o f m a r k e t p l a c e s t o t h e c u s t o m e r ’ s b u y i n g j o u r n e y .
Current Past
Present Future
Consumers visit individual banks
websites to apply for products or to
get information.
In order to get multiple quotes, they have
to visit multiple banks and complete
multiple applications.
This results in an inefficient, time consuming
application experience that is poor to
average.
They help consumers make sense of
the entire market in which they are
looking to get the best offer.
They help the consumer consolidate
their options in an “apple to apples”
comparison.
They help create efficiency and
convenience for consumers, in a way that
saves time and money.
They empower the consumer to take control
of their experience and offers transparency
in their decision making.
The practical implications of this are that traditional
financial institutions find themselves having to work harder
to secure customers’ business. This is compounded by the rise
of innovative fintech solutions that are poised to transform
existing banking models in favour of offering more value and
convenience to customers.
Technology is empowering customers to analyse their service
providers more carefully, before making financial decisions,
while start-ups are leveraging tech to provide more convenient
and effective customer service. Currently, South Africa’s top five
banks are competing aggressively for home loan market share
and the market can expect this trend to continue beyond 2020.
M
any people consider getting property a means to
increased wealth. While some fear paying large
amounts of money buying property that could
have been bought at a cheaper price, and some fear letting
go of large some of money not knowing how they can make
it back again in returns. Well, there is always an opportunity
to make money in the property sector, like it is now in the
country.
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APRIL/MAY 2020 SA Real Estate Investor Magazine
South Africa is currently in what is termed a ‘buyers’ market’,
with more supply of properties than demand from buyers. In
the last five years, properties have often stayed in the market
longer than average and asking prices have remained the
same or decreased.
On the other hand, borrowers are in a strong position,
thanks to the South African Reserve Bank's decision to cut
It is known that financial institutions have to lend money to
customers in order to sustain their businesses and grow. These
institutions do not make money until they have advanced
funds to customers and successfully collected instalments,
by charging interest in the process. This level of competition
to win the hearts, minds and share of customers’ wallets, puts
quality borrowers in the pound seat, where they can now seize
the opportunity to choose their lenders.
1
The MortgageMarket online platform, allows for a
transparent “apples to apples” comparison of home loan
offers, which simplifies and speeds up the process of shopping
around – giving customers full control and independence in
their home buying journey.
Further to this, it gives the customer a minimum of R5000
and up to R25000 in guaranteed money, just for self-serving.
The efficiency and convenience of this new approach saves
customers time, empowers them to take control of their home
buying experience and as a unique value-add pays customers
real money for doing so.
It is extremely important for property buyers and those
hoping to purchase their first properties to pay attention to
the benefits that come with owning a property. They include
the pride of property ownership, the appreciation value of
property, mortgage interest deductions among many others.
TIM AKINNUSI Tim Akinnusi is the
co-founder and CEO of MortgageMarket.
SA Real Estate Investor Magazine APRIL/MAY 2020
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