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 Local elections, international uncertainty: How will the rand respond?

As we dust off the Easter Holiday cobwebs, we enter the business end of the local election. This brings about a lot of local noise which could increase volatility in the rand. The market will look at any headline news which could lend short-term momentum to the rand after a period of range-bound trading. 

Read more

How does Tyme bank compare to traditional banks?

The South African banking industry is slowly moving into the digital space. In 2001, Capitec Bank opened its doors, changing the way banking had traditionally been done, ensuring that customers can access their accounts digitally.  

Read more

Young professional? Here is the best bank for you

If you’re under 35, have a four-year degree, and you’re looking to take your banking experience to the next level, you may be considering young professional banking products.

Read more

Comparison of Gold Credit Cards offered at top South African banks

Nowadays banks are less particular about the colour of the cards they offer. However, they still name their cards based on the original colours. This week Justmoney found out how gold credit cards compare with one another.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

KFC Burger Special

Price: R60
When: Daily
Where: Nationwide

Amani Spa and Wellness Special

Price: From R380 to R1,200
When: Daily
Where: Cape Town and Johannesburg

Metropolitan Actuarial Bursary

Price: Free
When: Daily
Where: Nationwide