Absa’s loyal milch cows

Finweek English Edition - - Letters - CHARL STRY­DOM Via email Let­ter short­ened - Ed

OVER THE past few months Absa’s ad­min­is­tra­tion fee for mort­gages has qui­etly soared sky-high. In a re­cent let­ter from Absa, the ad­min fee for my mort­gage was R7,98/month on 1 April 2008. On 1 May the amount had been in­creased to R14,82 (men­tioned in pass­ing in fine print in the an­nual mort­gage state­ment) – at the time an in­crease of “only” 85,7%. Now, on 1 Au­gust, it was in­creased to R28,50 – a fur­ther in­crease of 92,3%. So the in­creases be­tween April and Au­gust to­tal around 257%. How’s that pos­si­ble, es­pe­cially at a time when the con­sumer is al­ready suf­fer­ing un­der the bur­den of in­ter­est rate in­creases and in­fla­tion?

The rea­sons are given as be­ing the nu­mer­ous chal­lenges in the mort­gage in­dus­try. Nice and vague – and those of us who pay again have to won­der whether we aren’t hav­ing to make up for those who don’t pay, as is usual in our coun­try.

Absa doesn’t say it in their let­ter but I un­der­stand this in­crease only ap­plies to mort­gages of more than R500 000. If that’s so, can any­body give me a rea­son why it costs more to con­duct the ad­min­is­tra­tion of a loan above R500 000 than one un­der R500 000?

The high­light of the cor­re­spon­dence that I al­ways re­ceive from Absa is the “val­ued client” part. Be care­ful never to be­come a val­ued client: it’s just an­other way of say­ing “loyal milch cow” – even from as far back as the days of Volk­skas. Loy­alty in the bank­ing world comes only from the side of the val­ued client.

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