Absa Home Loans ups credit limit for home loans

Absa's home loan unit has eased credit terms on mortgages

Absa has reportedly enhanced the credit limit for home loan units after the departure of Barclays as the bank’s majority shareholder. The bank is hoping to grow its share of new home loans now that Barclays is no longer dictating its credit criteria.

Business Day reports that Absa Home Loans was the first business unit to approach the group’s credit committee to increase its credit risk after Barclays’ sale of its majority stake in the bank.

“The Barclays sell-down will provide us with the opportunity to make our own decision,” head of Absa Home Loans Carel Gronum was quoted as saying.

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Absa plans to increase its share of new flows in the mortgage market to 20% from a level of 18% and a low of 15% in November 2016. The enhancement will be done at an improved margin and without increasing the risk profile of the book.

“The sell-down will unlock opportunities for us to do things differently and foster an owner-based entrepreneurial culture,” he said.

Gronum told the publication that even in the weak economic climate, with consumers under immense financial constraints, there were pockets of quality.

Absa had reportedly been forced to turn down good-quality customers seeking 100% bonds due to restraints on the number of full-value or close to full-value bonds it could offer. In July this year, it had a home loan book of R225 billion or 25% of the country’s mortgage book of R908 billion.

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Gronum said the bank would ensure the business was profitable and sustainable. He said that applications previously took 14 days to process and were now done in four days, and added that the unit would target young professionals, private bank customers and the core middle market.

Source: Business Day