FSC mortgage loan performance assessment: with REAL data
The first phase of the Financial Sector Charter took place between January 2004 and December 2008. During that time (according to Banking Association unaudited data), the financial sector originated a total of R44,8 billion in mortgage, fully guaranteed, unsecured, residential development, and wholesale & social housing loans to FSC target market households. By far the greatest area of activity was in mortgage lending: 234 638 mortgage loans to a total value of 28 billion were originated in the five year period.
In the aftermath of the FSC, and in considering the long term implications of such targeted lending, the performance of these loans is an important consideration. What was the rate of default in this market segment, compared with the entire market? It would seem a simple question, especially important given government’s intentions to provide mortgage insurance in this market. Without a quantification of the risk, we are unable to quantify the insurance that might be required. There is no publicly available data set, however, that considers mortgage loan performance on an income segmented basis – from the nationally available data, it is impossible to determine the specific performance of the FSC market.
That is, until now. With permission from the Credit Providers Association, and support from XDS Credit Bureau, we have been able to undertake a detailed analysis of loan performance in the FSC sub-market. The work has been done by Eighty20 and has explored key indicators including NPLs by month and month since inception segmented by various client and loan characteristics (i.e. age and gender of client, size of loan, origination date); NPLs by suburb; and ageing analysis and cure rates. We are thrilled with this data – this is the first time we’ve been able to consider a specific sub-market of the SA mortgage market.
Please come to hear the presentation of the findings and explore opportunities for future analyses at the FinMark Forum on the 25th of August 2011
Time: 17.30 to 19h00 (with refreshments thereafter)
Venue: Old Mutual Auditorium, Old Mutual Square, Isibiya Building, 93 Grayston Drive, Sandton.
The forum is a meeting place for practitioners and others interested in access to financial services in Southern Africa and beyond