Home loan provider SA Home Loans, has entered the affordable housing market. It means that it can offer people earning less than R18 000 per month a home loan to get onto the property ladder.
“We're delighted to announce our entry into this fast growing market. Now lower income earners have access to the same approach to mortgage lending that's helped more than 150 000 individuals and families purchase their own homes,” said SA Home Loans chief executive, Kevin Penwarden.
Penwarden said affordable housing was a major segment of the South African housing market, with properties valued between R250 000 and R500 000 making up more than a quarter of all registered residential properties.
An untapped market
According to reports by the Affordable Land and Housing Data Centre, of the nearly 6 million residential properties on the Deeds Registry, 3,5 million (58%) are valued at less than R500 000. Of the 6 886 suburbs on the Deeds Registry, about 3 500 have an average property value of less than R500 000.
Despite this, there is still a big shortage of decent affordable housing. FNB Housing CEO, Marius Marais said there is still an estimated 900 000 homes needed to accommodate first time home owners that want to purchase properties below R600,000.
“The demand has not been matched by a similar appetite in the provision of end-user finance by home loan providers, so we're confident that our entry improves not only the scope, but also the quality of choice available to lower income buyers,” said Penwarden.
SA Home Loans’ helping hand
To cater for the many lower income buyers who struggle to save for large deposits, SA Home Loans is offering 100 percent loans to qualifying customers, with a 20 year term variable interest rate loan. They have also reduced their minimum property size rules? to take into account smaller properties.
To make fundraising less challenging, SA Home Loans have secured sufficient funding to make them a sizeable role-player in the affordable housing market.
“With our entry into the affordable housing market, we're looking forward to sharing the stories of a whole new generation of customers as they tell us how excited they are about owning their first home,” said Penwarden.