Roy Cokayne

SA HOME Loans has entered the affordable housing market.

Kevin Penwarden, the chief executive of South Africa’s largest non-bank specialist home loan provider, said yesterday that affordable housing was a major segment of the residential market, with properties valued between R250 000 and R500 000 making up more than a quarter of 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,” Penwarden said.

He added that SA Home Loans was mindful of the fact that many lower-income buyers found it extremely difficult to save for the large deposits required for many mortgages and was therefore offering 100 percent loans to qualifying customers, with a 20-year loan at variable interest rates.

It had also reduced its minimum property size.

Affordable housing carried a stigma of higher risk, he said, making fund-raising a challenging exercise. However, SA Home Loans had leveraged its fund raising expertise and managed to secure sufficient funding to make it a sizeable player in this market.

“Our competitors make much of the fact that providing loans for affordable housing plays a crucial role in nation-building by allowing more of our citizens to get onto the property ownership ladder. We take this as a given.”