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Mortgage bonds in South Africa
A mortgage bond is a bond secured by a property (usually residential). There are four types of mortgage bonds:
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The most common is a variable interest mortgage bond
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Over the last few years we've seen the introduction in South Africa of fixed rate mortgage bonds
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Capped rate mortgage bonds
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Guaranteed decrease rate mortgage bonds (uncommon)
There are a number of suppliers of residential mortgage bonds in South Africa:
Deposit requirements
On the 10th June 2008, FNB (First National Bank) and ABSA changed their policies to require a 5% deposit of the value of the property before securing a home loan. Gavin Opperman, the Absa group executive for secured lending retail banking, explained Absa's rationale behind the decision as follows: "The current economic factors are putting pressure on consumer affordability, which means we need to encourage South Africans to avoid the risk of being overindebted. We believe that when consumers start factoring a deposit component in their buying decisions, they are more likely to buy a home closer to what they can realistically afford."
