Increasing computerisation and a lack of skills among bank staff have depersonalised home loan applications

The growing use of computers in almost every bank transaction can have great benefits for those applying for home mortgage bond finance – but it can also often work to their disadvantage, says Bill Rawson, Chairman of the Rawson Property Group.

The advantages of computerization, says Rawson, are that it will be less expensive and possibly quicker than the traditional one-on-one manual method in the long run. This, he predicts, will lead to one or more banks ‘breaking away’ and offering mortgages on easier terms and conditions.

“Already,” he says, “there are indications that one or two banks are contemplating making a move of this kind. If and when this comes about it will be very welcome to the residential sector.”

The big disadvantage of increased computerization, says Rawson, is that it depersonalizes the entire banking operation – including home loan financing – and causes it to be run on fixed score card criteria and assessments which appear to be cast in stone and can never be questioned. The staff handling these applications can also, he says, now get away with having very little interpersonal skills and are often simply clerks.

This, in turn, says Rawson, has led to the banks losing their ability to advise, monitor and support their less affluent clients – particularly those entering the home market for the first time.

“This may sound rather old-fashioned,” says Rawson, “but when I and my older colleagues (i.e. those above 60 years in age) first applied for a bank account, it was customary to sit down with the manager or a senior official and discuss one’s entire career prospects. A relationship would then be established that might endure for a lifetime – to the benefit of both parties because it could certainly result in the client being warned against and protected from unwise financial decisions – again especially in home financing.”

Today, says Rawson, thousands of emerging middle class South Africans aspire to become home owners – but they have to go about looking for a home and the finance for it with minimal knowledge of how the whole process works. As a result, hours of an estate agent’s time can be fruitlessly taken up, with the aspirant home owner knowing so little about home purchasing that he needs guidance all along the way.

What is more, says Rawson, this ignorance is by no means confined to the less affluent, younger borrowers.

“The agents in our group,” he says, “will tell you that highly intelligent university graduates, some with many years of experience in other fields, can still enter the residential property market without really understanding what is needed to qualify for a bond and what such a bond will or will not make possible.”

In the current circumstances, says Rawson, groups which can offer a bond origination service, advising the client without obligation on what his or her financial status will make possible are increasingly popular with the general public.

“A good bond originator,” he says, “will understand just how little exposure many clients will have had when it comes to home finance and will, with the right questions and some sound advice, steer them onto a path towards clarity. This may first result in them having to rectify blemishes on their credit records but later, they will find themselves advising their clients on how to structure their loan applications so as to be successful. This can be a very valuable – and, although it is not always acknowledged by the banks, bond originators have simplified and greatly streamlined the home loan application operation, thereby saving them hundreds of man hours.”

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