Banks open doors for affordable housing

http://www.thenewage.co.za

One of the major objectives of the financial services charter – stimulating delivery of affordable housing through joint public-private interventions – is showing significant progress since the charter was established seven years ago. All the major banks are capitalising as they write billions of rands worth of loans in the low-income sector.

On Monday, First National Bank (FNB) announced that it had exceeded its target of R9bn in the affordable housing market by providing new homes to more than 86000 middle-class families with a no-deposit policy for qualifying customers.

The bank said a deposit was a major stumbling block for most customers wanting to get their foot on the first rung of the property ladder.

This followed Standard Bank’s announcement last week that it had reached the R10bn mark in its affordable home loan book and that it expected to double the figure by 2015.

In July, financial services group Old Mutual’s investment arm raised R9bn for its innovative Housing Impact Fund for South Africa, aimed at helping South Africans earning less than R15 000 a month to meet their housing needs.

The fund, one of the largest of its kind ever raised in South Africa, finances the construction of affordable homes for sale and rent, as well as providing housing loans and rental accommodation for struggling families.

Marius Marais, CEO of FNB housing finance, said the R9bn lent since the bank formed its affordable housing division 10 years ago, was “a significant contribution in the provision of decent and affordable housing for first-time homeowners who form the backbone of the future housing market”.

“We are deeply committed to stimulating this under-developed sector, which caters specifically for those who earn too much to get a government housing subsidy, but struggle to qualify for a conventional home loan.

“Playing a role in housing people in this income bracket is important to us and this achievement shows that we are making great strides,” said Marais.

FNB said the under-supply of homes in the R180000 to R500 0000 range had forced them to focus on the development of new housing projects for the middle class, as well as in the creation of tailored financial solutions to meet the market’s needs.

“Our goal is to provide end-user finance to over 100000 housing units and house more families by 2012,” Marais said. In addressing the housing backlog and housing first-time homeowners, FNB said it was working with various partners to develop quality alternative building technologies that could assist in bringing down prices and increase energy efficiencies.

“Even though a holistic approach is required to address the backlog, we believe that good alternative building systems will enable consistent production of quality products at a faster pace,” said Marais.

To capitalise further in the sector, the bank vowed to continue to give 100% bonds in the affordable housing market space, despite the global financial downturn. “Developing tailor-made housing solutions that speak to the unique needs of our customers has enabled us to retain our no-deposit policy for qualifying customers, as a deposit can be a major stumbling block for most customers.

“We have learned many lessons in the first 10 years and there’s no doubt that the bank will continue to do the same thing in future. Our experience has not only ensured that we continue to grow our affordable housing book, but we are well positioned to ensure we continue to play a leading role in this sector in the future,” he said.

bernards@thenewage.co.za