The public response to the launch of SA Home Loans has been positive. Many bondholders may be wondering how a small private company is able to beat the big banks with significantly lower interest rates.
Bankers acceptances are short-term corporate debt traded on the money market at going rates.
The mortgage rate charged by SA Home Loans will be adjusted in response to movements in this rate at the end of each quarter. In terms of the scheme, a mortgage bond will be registered against the title deeds of the property as usual, and the property will remain registered in the owner's name. This requires an existing bond to be re-registered. Stockley says re-registration can be achieved quite cheaply. This translates into reducing the term of a new bond by about half, says Stockley.