Pension backed loans - Harvest Chartered Accountants
Copyright ? 2010 Eighty20
Pension backed loans
October 2011
2
Agenda
Overview of housing finance Focus pension backed loans
It is useful to clarify what we mean by housing finance. Is housing finance for housing, or secured by housing? Do we care what kind of housing?
Housing finance products in South Africa
Mortgage finance
Fully secured or pension backed
loans
Unsecured housing loans
Savings
Can be finance for housing or finance secured by housing (and used for another purpose)
The value of the residential mortgage book at June 2011 was R773.37 billion (63% of all consumer credit)
There are 1.81 million residential mortgages
Between10-14% of households have a mortgage
Of the 25.449 billion mortgage credit extended in Q2 2011, 93% by value (83% of accounts) went to borrowers who earn more than R15,000 a month
Housing loans guaranteed by pension fund
No accurate estimates of the size of the market
Various studies indicate the value of the book could be between R5-17 billion
No accurate estimates of the size of the market
Researchers estimate that between 10% and 30% of unsecured loans are used for housing
According to the NCR as at June 2011 the total value of the unsecured loans book was R87.98 billion (between R8.7R26.3 billion for housing?).
Of the R18.954 billion granted in Q2 2011, 35% by value (20% of accounts) went to borrowers who earn more than R15,000 per month
No supply-side data on extent of savings for housing
Can be critical for access to mortgages or to finance incremental housing investment
Facilitate incremental housing investment
Increase / improve stock of housing units
4
Mortgages account for 63% of all consumer credit by value, but only 5% of the number of active accounts
Consumer credit: Gross debtors book Q2 2011
(R Millions)
Unsecured credit 87,978 7%
Short-term credit 747 0%
Consumer credit: Gross debtors book Q2 2011
(Number of accounts, 000's)
Short term credit 548 1%
Mortgages 1,810 5%
Credit facilities, 135,752,
11%
Secured credit 4,335 12%
Secured credit
228,974 19%
Mortgages 773,371
63%
Credit facilities*
22,829 64%
Unsecured credit 6,292 18%
Source: NCR Consumer Credit Market report *Note: Credit facility includes all credit cards, store cards and overdraft accounts
5
83% of mortgage accounts went to borrowers who earn more than R15 000 per month. Secured and unsecured loans are more popular with lower income individuals
Number of credit agreements 2011 Q2
(Loans granted, R Million)
100%
80%
60% 40%
31,574 (83%)
20% 0%
4,523 (12%) 2,090
Mortgaes
(5%)
Source: NCR Consumer Credit Market report
< R10k
110,535 (31%) 39,463 (11%)
205,343 (58%)
Secured R10k-R15k
224,862 (20%) 184,476 (16%)
739,115 (64%)
Unsecured R15K +
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