BMW Finance to offer home loans

Category Banks

A number of indicators right now point to the months ahead in the property sector being a period of slow but steady upturn and recovery.

Bill Rawson, chairman of the Rawson Property Group, says chief of these indicators is the fact that the average House Price Index is now at a two year high and, according to the FNB Property Barometer, is now rising at 8.6 percent per annum. 

Also encouraging, as was recently pointed out to him by an eminent property analyst, is the fact that there has been a 12 percent plus decrease in civil summonses in the first quarter of this year, a 42.4 percent decrease in liquidations and the number of 100 percent bonds issued has risen by over 35 percent.

Another factor which very definitely could also boost the entire house marketing sector is that the motor manufacturer BMW recently declared an intention of moving into home finance, a field in which they have been quietly active in for some time, he says.

“According to reports in the media, they have already in fact started to ask for more applications.”

It seems that BMW Finance believe that the home finance divisions of the banks have given extremely poor service and are no longer judging applicants on their true merits. 

Rawson says it appears that BMW will be able to issue loans at lower costs and lower interest rates than the banks are currently doing and give better service. 

They have, in general, promised to get back to the applicant within one week of the application, provided that the documentation they ask for is in order, he says.

Rawson says in his opinion, the move by BMW Finance makes complete sense because the existing BMW clientele base is almost certain to be an excellent initial target market. 

The link-up between motor cars and homes also increases the security of the loans because homes are a more reliable asset than vehicles.

“What is particularly exciting about BMW’s move is that it is likely to make the banks more competitive in chasing the home finance market.”

It could also lead to other motor finance houses following suit, thereby greatly widening the options open to home loan applicants, says Rawson.

Asked if the pending Eurozone crisis and possible collapse will not affect South Africa’s economic (and housing) performance, Rawson says South Africa is now positioned to ride out the problems being encountered in Europe.

“My analysis of the situation is that we will be no worse off in the difficult times ahead than we are now.”

He points out that the European and other major banks have already factored into their calculations the possibility of a massive debt write-off and will come through the next year or two severely hurt but not killed off and providing the basic necessities of life such as food and housing will keep economies ticking over.