So what's going on here? Well with close to 80% of the mortgage market ABSA have a lot to lose if property prices go south any further and defaults increase. They're already auctioning off repossessed houses as fast as possible but this action means it might not be fast enough. It would seem they expect to be the new owners of a chunk of SA realty soon and are trying to reduce losses at the inevitable discount rate bank repo auction by keeping the extra cash paid into the bond.
2 comments:
Just like the banks, They will give you an umbrella when the sun is shining, but when it starts raining they rip it away faster than you can say I have an access bond.
My property blog focusses on Private Property Sales
Banks re not stupid contrary to popular belief.
They are doing this because of falling property prices and the fact that alot of bonds granted in the last three years now sit above the value of the property meaning that the fear of negative equity is in the air.
That aside, many people are using their access bonds as personal atm's withdrawing money to buy luxury cars, big screen tv's and to fund their everyday living expenses due to the current bad times.
Absa is not the only one that has stopped this facility. FNB and Standard put the brakes on their version 6 months ago.
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