Johannesburg - Sanlam has invaded banking territory by raising its profile in the home loan market.
Its marketing stance is very different to that of the banks.
Sanlam Home Loans, a joint venture between financial services firm Sanlam and Absa, was offering interest rate concessions to low-risk borrowers, said chief executive Piet van der Walt.
For instance, someone with a loan of more than R600 000, worth only 70 percent of the value of the property, and whose monthly repayments are equal to only 15 percent to 20 percent of their monthly income, will pay 2 percentage points less than prime - now at 13 percent.
This compares with the typical middle-income banking client who would qualify for a concession of only 1 percent to 1.5 percent, according to Van der Walt. The 2 percentage point concession would save R201 120 over the 20-year term of the loan, he said.
This marketing stance contrasts with the traditional approach to marketing home loans, which stresses the easy availability of loans worth 90 percent to 100 percent of the property value and allows repayments of about 30 percent or more of monthly income.
The only change since the implementation of the National Credit Act last month is that banks now have to take into account borrowers' total monthly commitments and their ability to service new debt.
Van der Walt said Sanlam Home Loans' new campaign was intended to alert existing clients to the benefits borrowers derive from increasing their equity in their homes.
This too is in contrast to the traditional mortgage lenders, which have encouraged people to use their home loan facility for other purposes.
Interest rates are lower on mortgages than on most other types of loans, because the loans are made against the security of fixed property.
The ability to freely tap mortgage finance is largely responsible for the consumer boom that has been driving economic growth over the past few years.
Leon Barnard, the home loans director for Standard Bank, said the bank was "comfortable about lending up to the full value of the property. We have a product that allows people to go over 100 percent. This is mainly to support first-time buyers, by helping them cover the cost of the acquisition."
But clients are subjected to credit scoring. Their credit record and employability are important criteria in deciding on the terms of the loan.
Peet van der Walt, the chief executive of First National Bank (FNB) personal banking, quoted similar terms.
He said FNB also offered a One Account - a home loan account combined with a transaction account.
"It allows salaries to be paid directly to the home loan, so the borrower benefits in terms of interest paid on balances in the account," he said.
Sanlam is not new to the home loan market.
"We started offering mortgage loans to our existing clients three years ago and we marketed through our intermediaries," said Sanlam's Van der Walt. "Now we have decided to go to the next level and market more aggressively."
He has earmarked R2 million for a six-week advertising campaign and hopes to grow the mortgage book from R5 billion now to R7 billion by the end of the year.
"We have already securitised R3 billion of the R5 billion and will securitise another R1 billion at the beginning of August," he said.