Guiding consumers since 2009

Banks boost affordable housing loans

By Staff Writer

 

Standard Bank and First National Bank’s (FNB) affordable housing loan books are experiencing a boost thanks to the market boom of first-time home buyers. 
Standard Bank’s books grew by R14 billion last year while FNB has a loan book of close to R11,5 billion.
 
The two banks are doing their part to further boost this growing market with Standard Bank setting aside R2 billion for affordable housing. Meanwhile FNB says it is offering market related rates priced individually so that each potential home-owner gets the best rates based on their individual circumstances.
 
FNB’s business unit Housing Finance, focuses solely on the affordable housing market. According to Marius Marais, CEO of FNB Housing Finance, anyone who earns below R25 000 who’s looking to purchase a home under R600 000, falls in this market.
“In this market the majority of home buyers are in fact first-time home buyers. Housing Finance started 10 years ago and has to date financed 97 000 homes. We also offer owner education to first time buyers,” says Marais.
 
According to Marais, because property ownership is such a big part of wealth creation, it is also the biggest asset in the market. It is because of this wealth creation that many potential home-owners are opting to buy rather than rent houses. This capital creation may be used in future to create further wealth.
 
“We estimate that the first 1 000 home owners in Cosmo City -a growing suburb in Gauteng- accumulated R100 million of private capital with the growth in their property prices,” said Marais.
 
Demand for affordable housing
 
But Marais adds that there is still an estimated 900 000 homes needed to accommodate first time home owners that want to purchase properties below the R600 000. 
 
However, banks are not the only ones doing their bit to help people onto the property ladder.  According to reports, government has put initiatives in place as well. These measures include the finance-linked individual subsidy programme. This project aims to reduce the initial home loan amount to make monthly instalments more affordable. For more information about this click here
 
What to consider when applying for a home loan
 
All potential homeowners should consider the full cost of home ownership before taking out a loan. Marais says you should look at your individual budget and reduce items such as short term debt and other non-essentials first. Also it’s a good idea for first time home buyers to attend a home-ownership educational programme, which is offered at FNB.
 
If you are worried about interest rates going up there’s always the option of fixing your home loan rate. “Potential home owners should consider a fixed interest home loan particularly for the initial years because it creates a stable monthly repayment. Also look at the loan term offered by the bank. Longer loan terms usually mean a lot more interest even though the actual quoted rate may be lower,” says Marais.

Recent Articles

Featured Four steps to rethinking your budget

We all think about budgeting at the end of each month. But before we know it, the new month has started. When last did you actually sit down and consider your spending habits?

Why can fund managers only invest 30% of pension funds offshore?

When you invest in your pension fund or retirement annuity, it will be placed in various asset classes. Of this, you cannot invest more than 30% of your retirement abroad. We find out why.

Who should be the main member on your medical aid?

Medical aid plans are designed to accommodate families. But if you have two adults on the same medical aid plan, how can you decide who should be the main member?

Your retirement savings could be the key to owning a home

Many people would love to become home owners but don’t know or have the means to do so. However, there are many ways, and one of them includes using your pension or retirement savings to secure a home loan.

Deals

Clicks Covid antibody test for R199

Price: R199
When: Daily
Where: Nationwide

2 Steaks for the price of 1 at Tiger’s Milk

Price: From R159
When: Thursdays
Where: Cape Town

Da Vinci's Monday Wings Special

Price: R145
When: Mondays
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions