Mortgage Origination: Important Lessons for South Africa

Abstract

Traditionally banks sold their own products and services. Mortgage origination (MO) only came to SA at the turn of the century. Although the initial consumer buy-in was small, the growth was phenomenal. By 2007 approximately 60% of all home loan applications in South Africa (SA) were sourced through origination. The entry of MO’s to the market has drastically changed the banks’ interactions and relations with home loan clients. MO’s are seen as providing a meaningful service to buyers and best of all: this service is free to home loan applicants. This study provides a comparative study of mortgage origination in Australia, Canada, Singapore, New Zealand, The Netherlands and South Africa. It further examines the role of mortgage originators in South Africa. The study reveals that South Africa might have much to learn from other countries in terms of MO practices, and regulation within the MO industry. A mixed methods approach was followed in this study and the information was triangulated with literature studies.

DOI: 10.5901/mjss.2014.v5n10p45