Standard Bank has made significant inroads into the affordable housing market since its entrance five years ago and now finances one in three houses in this market.
The bank’s affordable housing loan book grew 30 percent last year to a record R14 billion.
Nicholas Nkosi, the head of affordable housing at Standard Bank, said yesterday that the bank’s experience was also an indication that demand in this segment of the housing market had remained resilient despite weak economic conditions.
“There is still high demand for affordable housing. Standard Bank also expects to attract more prospective home buyers who are seeking to move out of the rental market and become home owners,” he said.
Nkosi said Standard Bank was quite comfortable with the performance of its affordable housing loan book but declined to provide any information about the percentage of mortgage bonds in arrears or the percentage of foreclosures in the past year.
“We have not seen any different trends from our normal [home loan] book. That speaks to the affordable housing market and people in this market prioritising their bond repayments,” he said.
Nkosi added that repayment arrears and foreclosures were primarily caused by “life events”, with something happening that led to the homeowner being unable to pay their bonds.
He said the price range of affordable housing financed by Standard Bank was homes between a minimum of R100 000 and R550 000 that were sold to households with a monthly income of up to R18 000.
Thabani Ndwandwe, the head of credit management for inclusive banking at Standard Bank, said more than R2bn or almost 80 percent of the loans granted last year were disbursed to first-time buyers.
Ndwandwe said the income band distribution of the loans granted showed it was not just financing the upper end of the affordable housing market but continued to increase access to home ownership for customers in the low-income segment.
Nkosi said Standard Bank had in the past five years helped more than 80 000 customers to buy homes in the affordable housing category.
He said the average size loan granted by Standard Bank was R350 000 and increasingly more people were putting down deposits when they purchased a home, which dispelled some of the notions about consumers not saving.
Nkosi attributed the strong growth in its affordable housing loan book to it having a very targeted affordable housing strategy and the strength of this market but he stressed that Standard Bank continued to be the country’s largest residential mortgage lender and its overall loan book continued to grow last year.
He said the Basel 3 regulatory capital requirements on banks were being introduced in a phased basis with some already in effect, which would result in increased interest rates on loans.
But Nkosi did not anticipate a material change in the interest rates payable on loans into the affordable housing market.