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Good news for lower-income home buyers

Apr 09 2013 11:11
Soweto-house, suburb, johannesburg

(File: Shutterstock)) (Shutterstock)

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Cape Town - SA Home Loans, South Africa’s largest non-bank mortgage finance provider, on Tuesday announced its entry into the fast growing market for affordable housing, a move that spells good news for house hunters earning less than R18 000 per month.

SA Home Loans CEO Kevin Penwarden said affordable housing is 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.

“Despite this, there remains a massive shortage of decent affordable housing.

"This 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.”

Taking into account the fact that many lower-income buyers find it extremely difficult to save up for the large deposits required for many mortgages, SA Home Loans is offering 100% loans to qualifying customers, with a 20-year term variable interest rate loan.

It has also reduced its minimum property size to take smaller properties into account.

Penwarden acknowledged that affordable housing carries a stigma of higher risk, making fund-raising a challenging exercise.

“Nevertheless, we have leveraged our fund raising expertise and managed to secure sufficient funding to make us a sizeable player in the affordable housing space.

"More importantly, our funding structure ensures that we will be in this market for the long term."

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