Housing and the Banking Council: briefing

Meeting report

HOUSING PORTFOLIO COMMITTEE
8 February 2000
THE BANKING COUNCIL ON HOUSING

Documents handed out:
Point form presentations by The Banking Council (attached to end of minutes)

SUMMARY
The Banking Council delivered a presentation on the history and current situation of the Council before moving on to the lessons learnt from the past five years of housing delivery and what banks are doing at present.

MINUTES
The Chair, Ms N Hangana (ANC), in introducing Mr Cas Coovadia and Ms Mary Tomlinson of The Banking Council of South Africa, commented that she hoped that the sensitive and controversial issue of bond repayments would be given attention.

History and current situation of The Banking Council
Mr Coovadia (the General Manager of the Council responsible for transformation) noted that the Council had been asked to brief the Committee and to exchange views and thoughts. The idea was that the Council and the Committee would inform each other.

Regarding the membership of the Council, he noted that it represented 45 banks. Among those represented are the "big 6" (Standard, ABSA, FNB etc), the Independent Bankers Forum (IBF, representing local banks other than the "big six") and the Foreign Bankers Association (FBA, representing foreign banks with local subsidiaries). The Council was a voluntary body funded by the banks.

The Board of Directors comprises one member from any bank whose liabilities to the public exceed 3% of the industry total, two members of the FBA and two members of the IBF. He noted that the management structure of the Council is flat; Mr Bob Tucker is the CEO, there are six General Managers and support staff. The total staff complement is 25.

He remarked that until three years ago the Council was banking community-driven and had an oversight role of various committees and associations. It was a "post office" for the banks merely to air their views. The Council is now attempting to focus half on influencing banks and half on influencing others.

The Council's mission is to be the best forum for banks to conduct competitive, profitable and responsible banking. It aims to represent the industry and to forge partnerships with government, NGOs and other bodies. Its approach to discussions with government has been to agree on the problems and to work together. It is no longer its position to put forward the views of banks but rather to put forward position papers of the Council (with the input of a broad range of stakeholders) to influence banks and other stakeholders.

Mr Coovadia outlined the key areas of the Council:
Transformation - The focus here is on low-income housing and micro finance and to explore innovative ways of delivering financial services to a broad range of people.

Banking Operations - This deals with normal commercial activities, property finance and crime where there is co-operation with the Department of Safety and Security.

Market Conduct - This area focuses on consumer protection. A code of conduct has been agreed upon by numerous bodies and will come into effect on 4 April 2000. The office of an adjudicator is to be established and the adjudicator will report to an independent board concerning disputes in the industry including those between banks and their clients. The Financial Services Provisions Bill is of importance in this area and deals with the possible restructuring of the industry to provide for a broader base of people.

Financial Markets - This area concerns taxation, currencies and exchanges.

Communication - The Council's website address is "www.banking.org.za". Press liaison and education are important concerns here.

SADC Banking Association - This was formed in 1999 and deals with co-operation across SADC countries.

Business South Africa (BSA) - The Council has introduced a debate on the restructuring of this body.

Housing Delivery and Banks
Ms Tomlinson noted that her presentation was divided into two parts. The first would be concerned with lessons from the past five years of housing delivery. This would be useful when the White Paper is revisited. The second part would be focussed on what the banks are doing at present.

The National Party policy had been directed simply at how to divide resources between various race groups. The National Housing Forum (NHF) was established in 1992 to develop policy for the interim period. The NHF comprised various organisations (but not the National Party) and two major issues were negotiated at that stage: the standard of housing and the approach to delivery.

It was decided that the policy had to be focussed on the poorest of the poor. There was a huge backlog and there was a debate surrounding whether to opt for depth or breadth. It was decided to go for breadth - to provide for as many people as possible. Regarding delivery, it was discussed whether government should have a mass role of developer and deliverer. It was decided that government should set out the policy and framework and that private companies and individuals should be involved in delivery.

There had been a decision to provide a once-off subsidy. This capital subsidy was not designed to deliver a house. It was to be the first step and government would be involved in facilitating security of tenure, basic services and rudimentary structures.

Ms Tomlinson identified six lessons gathered from research and consultation:

The Limits of Consensus - The NHF was tasked with developing a policy based on consensus. There was input from various sources and in order to obtain consensus, everything that all parties involved wanted was included in the policy. As a result, the policy could not deliver because the principles clashed. She cited the example of the clash between immediate delivery and community participation - a typically long process.

Beneficiary Satisfaction - The beneficiaries of NHF houses who were conventional home-owners were concerned about the "economic noose" of mortgage bonds. The quality of a number of housing programmes left much to be desired. The preconceptions regarding the ideal size of houses turned out to be wrong. It was assumed that a four-roomed house would be the minimum for satisfaction but it turned out that the key element of satisfaction was whether there had been positive consultation.

Private Sector Delivery vs. Public-Private Participation - The original White Paper did not involve local government and it became difficult for private developers to operate. There is currently a greater and positive shift towards a public-private partnership and away from tasking private industry to do everything. Many private households have wanted to carry out their own delivery and the option of giving people more responsibility is being investigated.

Mortgage Bonds - There had been pressure to make this product more accessible but affordable bonds have not been achieved. Although banks have used "fancy financial engineering", beneficiaries have been averse to mortgage bonds and they have a desire to control their own finances.

Less Ownership, More Rental - The bulk of policy has been directed at tenure and ownership. However, since the beginning of implementing the policy there have been calls for rental opportunities. The envisaged consolidation of settlements and communities has not occurred. Instead there has been transience - selling and moving in order to find employment. The reconstruction of cities has not happened and there should possibly be more rental opportunities at a lower standard for those less able to afford larger payments.

Mobilising Savings - Simply having subsidies on delivery falls short of the policy idea that not only subsidies should be injected. Families and individuals should also contribute.

Ms Tomlinson then turned to bank involvement in the national housing strategy. She noted that the Council had been involved from the early days of the NHF. By 1999 the number of subsidies provided has passed the 1 million mark. She remarked that despite criticism, South Africa stands out as "a star" when compared to international delivery standards. She cited the examples of Singapore and others.

Regarding their experience with mortgage lending, the banks had pulled out from the townships in the early nineties as a result of bond boycotts. The banks have now returned. There were, however, problems with first-time borrowers, including economic hardship, dissatisfaction with the product and political dissatisfaction. Consequently there had been problems with reselling the properties. She cited the example of Servcon having 13 000 properties in possession on its books.

Ms Tomlinson identified the reasons for the problems with bonds as being the fluctuation of interest rates ("spiking") which has been devastating to households. Furthermore the mortgage bond is complex and because pension funds have been used as guarantees, in bad times people have lost their houses and pensions.

Micro loans, on the other hand, are for a shorter duration. Pension funds are still used as security, but not the house itself. "Gateway" is taking a while to get off the ground but it should be able to offer a manageable product.

Ms Tomlinson concluded by noting that the Council has been extensively involved in the National Housing Strategy and in developing new products. It has been involved in CRA discussions and the banks have supported fair lending legislation.

Discussion
Mr Thlokwe (ANC) posed two questions. Firstly, he asked whether the backlog figure of 1,5 million reflected South Africa as a whole or only the urban centres. Secondly, he asked whether the code of conduct deals with racism.

Mr Montsitsi (ANC) also posed two questions. Firstly, he asked what the function of Servcon was and whether it could remove people from their houses. Secondly, he asked how the NHF could assist with RDP "death traps" - small, low-quality houses.

Mr Pheko (PAC) questioned the Council's priorities noting a disparity between the attention given to rural and urban housing. He asked what the source of poor-quality houses was and noted that there had been suggestions that corruption had contributed.

Ms Tomlinson replied that there was confusion regarding the backlog figures. The NHF had used the backlog figures together with the budget allocation in determining how much money was available for subsidies. The Department has used a figure of 3,5 million, which includes the rural and urban backlog. She remarked that no one really knows what the figure is and questioned whether both the rural and urban figures should be used.

Regarding the NHF and whether it could assist with RDP houses, Ms Tomlinson noted that the NHF no longer exists.

She turned to the question of quality and remarked that there had always been questions concerning why and how a simple box could be filled with cracks and leaks in a short time. It is now clear that municipalities have allowed building to take place on very bad land on which there should never have been development and there have also been developers who have looked to squeeze out profits.

Mr Coovadia noted that the banks have said that they will come to the table to discuss rebuilding as long as local government is present. Furthermore, a trust has been formed to assist in rebuilding houses.

Regarding racism and the code, he noted that the code prohibits racism. If a bank refuses a loan, it must have sound commercial reasons. He added that the code also provides for the simplification of contracts. He commented that Servcon was a partnership between banks and government and that the banks do not take exclusive decisions regarding foreclosure.

He turned to the question of the priorities of banks and the suggested disparity between rural and urban areas. He suggested shifting the debate away from whether banks should be pressurised into providing services in specific areas. Rather, while there are rural and poor persons who need services, these are not the electronic and other services which banks offer. There are other institutions that could deal with savings and loans and banks can be involved in negotiations around developing and establishing these. These associations would not need to cover the expenses and overheads which banks need to. He urged government to come to the negotiation table and noted the need to amend regulations. He emphasised that while banks do not want to absolve themselves from responsibility, they do not want to be pressured and that such pressure would not work.

Dr Rhoda (NNP) questioned whether the Council was a statutory body. He remarked that it seems to exist more to protect banks than to protect consumers. He remarked further that he had witnessed discriminatory practices by banks and concluded by requesting that more information be furnished by the Council regarding the proposed adjudicator.

Ms Ramakaba-Lesiea (ANC), regarding policy, questioned what was provided for regarding the surrounding environment where houses are built - clinics, businesses, parks etc.

Mr Khoza (IFP) remarked that in the rural areas there was no need for a complex and expensive infrastructure, but instead that houses should be cheaply produced.

Mr Coovadia responded that the Council was voluntary and not a statutory body. Regarding the perception that banks do not protect customers, he acknowledged that there have been complaints about services etc. He stated that the code is designed to address issues of discrimination between clients but repeated that banks will be able to differentiate between clients on commercial bases.

He noted that the adjudicator will not be accountable to banks but to an independent body. Addressing the question of the environment and the land remaining with the community, he noted that if there are community-based savings and loan bodies, these would generate the circulation of money within the community. He emphasised that banks must nevertheless support these bodies.

Ms Tomlinson addressed the issue of integrating houses with infrastructure and amenities. She remarked that the White Paper had called for houses and amenities together. However, amenities come from different departments and this makes co-ordination difficult. She noted that President Mbeki has called for more integrated development. She added that when it comes to establishing businesses in communities, this must be left to the market and when businesses want to move in.

She commented that the budget has been shuffled to provide more money to rural areas and that it would be interesting to observe the responses to the rural housing policy when it is presented.

Ms Coetzee-Kasper (ANC) stated that as she understood it, the functions and purposes of the banks ignore the community outside. She added that the manner in which banks deal with mortgage holders is problematic and that improvements and reductions in the values of property are not taken into account.

Mr Montsitsi commented that he appreciated the opportunity for contact with the Council. He drew attention to the severe trauma families endure when they lose their houses. He remarked that the Council had in the past suggested cancelling and alleviating debts and requested comments in this regard. He expressed his appreciation that progress was being made in terms of fair lending legislation and requested that lending statistics be provided in the future.

Mr Coovadia remarked that there had been a debate within the banks regarding bank assessors. He stated that the people responsible for building the houses were the builders and that in too many instances banks were being turned to in order to rectify problems and this should not be the case. He stated that the banks have assisted in the past where they have not been obliged to.

He extended an invitation to people to bring complaints regarding criminal activity of bank employees to the attention of the Council. He made it clear that banks will not deal with contractors who are not registered with the NHBRC.

Ms Tomlinson noted that there are a number of parties involved in the process of building houses and who sign off at various points. What must be looked at is at what point the problems arise and with whom they reside. There are engineers involved who have fidelity funds to compensate for damage for which they are responsible. She emphasised that it is not always the fault of the banks.

She turned to the difficulty of long term mortgage bonds and raised the difficulty of compound daily interest and the extended duration of the loan when payments are missed. She emphasised the need to move away from these 15- or 20-year loans. Regarding interest payments, these are made first before there can be capital payments and this is what accounts for the impression that the loan is not in fact being reduced despite payments having been made. Mr Coovadia stated that he would send an example to illustrate the distinction between mortgage bonds and term-loans.

The Chair suggested arranging a workshop with Servcon. She thanked the members of the Banking Council for their presentation and concluded by noting that the parties had not yet submitted draft programmes for the committee. These need to be submitted in order to correlate them with the Department's programme.

Appendix 1:

BANKING COUNCIL - SOUTH AFRICA

MEMBERSHIP

• 45 BANKS
• "BIG 6"

- ABSA

- FIRST NATIONAL BANK

- STANDARD BANK

- NEDCOR

- INVESTEC

- BOE

• INDEPENDENT BANKS

- INDEPENDENT BANKERS FORUM

• FOREIGN BANKS

- FOREIGN BANKERS' ASSOCIATION

 

BOARD OF DIRECTORS

• ONE MEMBER FROM ANY BANK WHOSE LIABILITIES TO PUBLIC EXCEEDS 3% OF INDUSTRY TOTAL
• 2 MEMBERS OF FBA
• 2 MEMBERS OF IBF

 

ROLE, MISSION & APPROACH

• TO ESTABLISH AND MAINTAIN THE BEST POSSIBLE PLATFORM ON WHICH BANK GROUPS CAN DO COMPETITIVE, PROFITABLE AND RESPONSIBLE BANKING
• REPRESENTING INDUSTRY
• PARTNERSHIP
• POSITION PAPERS

KEY AREAS

• TRANSFORMATION

- LOW-INCOME HOUSING

- MICRO FINANCE

• BANKING OPERATIONS

- PROPERTY FINANCE

- CRIME

- BANKING REGULATIONS

• MARKET CONDUCT

- CODE OF CONDUCT

- ADJUDICATOR

- FINANCIAL SERVICES PROVISIONS BILL

• FINANCIAL MARKETS

- TAXATION

- FOREIGN BANKS

- JSE

- BOND EXHANGE

 

COMMUNICATION

• WEB-SITE
• PRESS LIAISON
• EDUCATION

- VIDEOS

- SAVINGS

- HOME LOANS

- ATM TRANSACTIONS

• GUIDE (COMIC FORM) ON BANKING SERVICES
• SADC BANKING ASSOCIATION
• BUSINESS SOUTH AFRICA (BSA)

 

Appendix 2:

LESSONS FROM 5 YEARS OF HOUSING DELIVERY

NATIONAL HOUSING FORUM

- ESTABLISHED IN 1992 AS A MULTI-PARTY NEGOTIATING FORUM

- AIM WAS TO DEVELOP THROUGH A CONSENSUS-BASED APPROACH, A NEW HOUSING POLICY DURING THE "INTERIM" PERIOD

 

BACKGROUND

• NATIONAL PARTY: GOVERNMENT POLICY

- HOUSING BUDGET RESOURCES WERE SPENT IN AN INEQUITABLE MANNER ACROSS THE FOUR RACE GROUPS

• REPRESENTED AT THE FORUM: POLITICAL PARTIES, UNIONS, DEVELOPMENT ORGANISATIONS, BUILDING INDUSTRY, BANKING INDUSTRY, BUSINESS AND CIVICS

 

TWO MAJOR ISSUES TO NEGOTIATE

• THE STANDARD OF HOUSING TO BE DELIVERED
• THE DELIVERY APPROACH

 

STANDARD

• THE HOUSING BUDGET WAS REFOCUSED ON THE POOR
• IN 1991, THE HOUSING BACKLOG WAS CALCULATED AT :

- 1,5 MILLION URBAN HOUSEHOLDS

- PLUS NEW FAMILY FORMATION OF 178,000 HOUSEHOLDS PER ANNUM

• DEBATES CENTRED ON WHETHER TO GO FOR "BREADTH OR DEPTH"

 

DELIVERY APPROACH

• GOVERNMENT MASS HOUSING PROGRAMME
• GOVERNMENT FACILITATED / DEVELOPER-DRIVEN / PEOPLE-CENTRED DELIVERY

 

THE NEW POLICY

• A "ONCE-OFF" CAPITAL SUBSIDY:

- HOUSEHOLD INCOME LESS THAN R 3 500 PER MONTH

- CITIZEN OR PERMANENT RESIDENT

• NO PREVIOUS HOUSING SUBSIDY

AMOUNT OF SUBSIDY PER MONTHLY INCOME

0 - R 1500 R 15 000

R 1 501 - R 2 500 R 9 500

R 2 501 - R 3 500 R 5 000

TO PROVIDE SECURITY OF TENURE, ACCESS TO BASIC SERVICES AND A RUDIMENTARY STRUCTURE

 

LESSON 1 :

THE LIMITS OF CONSENSUS

• THE NHF WAS TASKED WITH DEVELOPING A CONSENSUS AROUND THE PRINCIPLES AND POLICY THAT WOULD UNDERPIN HOUSING DELIVERY
• THE CONFLICTS AT THE FORUM WAS REALLY BETWEEN THOSE WHO FAVOURED A "MARKET-ORIENTATED" STRATEGY LED BY THE PRIVATE SECTOR AND THOSE THAT PREFERRED A MORE "PEOPLE-CENTRED" APPROACH IN WHICH COMMUNITIES WOULD BE CENTRAL PLAYERS

FORUM OPTED FOR BOTH, DESPITE THEIR INCOMPATIBILITY:

- IMMEDIATE AND VISIBLE DELIVERY

• COMMUNITY PARTICIPATION
• DEVELOPER-DRIVEN DELIVERY
• ECONOMIC EMPOWERMENT OF COMMUNITIES
• PROGRESSIVE HOUSING
• NO HIDDEN SUBSIDIES

 

LESSON 2:

BENEFICIARY SATISFACTION

• PRODUCT

- COST

- QUALITY

- SIZE

• PROCESS

- SOCIAL COMPACTS

• COST

- CONVENTIONAL HOMEOWNERS WITH CREDIT-LINKED SUBSIDIES WERE EXTREMELY CONCERNED AT FINDING THEMSELVES IN AN ECONOMIC NOOSE

• QUALITY

- LEFT MUCH TO BE DESIRED

• SIZE

- OWNING A FOUR-ROOMED HOUSE DID NOT IMPLY A HIGHER LEVEL OF SATISFACTION THAN OWNING A ONE-ROOMED STRUCTURE

PROCESS - VERY LITTLE CONSULTATION

 

LESSON 3

LESS PRIVATE SECTOR DELIVERY, MORE PUBLIC-PRIVATE PARTNERSHIPS AND PEOPLE'S HOUSING PROCESS

• SUBSIDY SCHEME WAS DESIGNED SO DEVELOPERS, NOT BENEFICIARIES WOULD BE PAID UPON TRANSFER
• BENEFICIARIES ASKED THE FORM OF PAYMENT THEY WOULD PREFER : DIRECTLY TO THE DEVELOPER OF THROUGH A VOUCHER
• BENEFICIARIES WANTED A VOUCHER SO THEY COULD EXERCISE INDIVIDUAL CONTROL OVER THE ACTUAL BUILDING PROCESS
• BENEFICIARIES FELT THAT THEY WERE NOT GETTING THE FULL VALUE OF THE SUBSIDY USING PRIVATE-SECTOR DEVELOPERS

 

LESSON 4:

MORTGAGE BONDAGE

• MUCH OF THE PAST DECADE WAS SPENT USING "FANCY FINANCIAL ENGINEERING" TO MAKE MORTGAGE AFFORDABLE TO PEOPLE
• RESULT HAS NOT BEEN AFFORDABLE MORTGAGES, BUT OVER EXTENDED BORROWERS
• RESEARCH REVEALED THAT BENEFICIARIES HARBOURED A STRONG AVERSION TO PLACING THEMSELVES AT THE MERCY OF COMMERCIAL LENDERS
• A DESIRE TO CONTROL THEIR OWN FINANCES

 

LESSON 5

LESS OWNERSHIP MORE RENTAL

• ONE OF THE GOALS OF THE HOUSING POLICY IS CONSOLIDATION - I.E. THE CREATION OF STABLE AND DEVELOPING NEIGHBOURHOODS AMONG LOW-INCOME PEOPLE
• ANECDOTAL EVIDENCE SUGGESTS CONSOLIDATION IS NOT OCCURRING AT THE SCALE ANTICIPATED :
• POPULATIONS ON THE URBAN PERIPHERY ARE MUCH MORE TRANSIENT THAN EXPECTED
• RATHER THAN CONSOLIDATING IN THE URBAN AREAS, HOUSEHOLDS OFTEN SELL THEIR SITE AT A FRACTION OF ITS COST
• THE TASK OF RECONSTRUCTING SA'S CITIES IS NOT BEING MET AS EXPECTED
• LOCAL AUTHORITY LEFT WITH UNFUNDED MANDATES

LESSON 6

SHOULD THE SUBSIDY BE GEARED THROUGH SAVINGS?

• BY NOT "GEARING" THE SUBSIDY AND ALLOWING "SUBSIDY-ONLY DELIVERY" ARE WE ENSURING THAT THE POLICY FALLS SHORT OF MEETING ITS FUNDAMENTAL PRINCIPLES?
• A RE-READING OF THE WHITE PAPER REVEALS THAT THE SUBSIDY WAS NEVER INTENDED TO BE THE ONLY FINANCIAL CONTRIBUTION TO HOUSING DELIVERY
• GOVERNMENT REGARDS PERSONAL EQUITY IN HOUSING AS A CORNERSTONE OF A SUSTAINABLE HOUSING DELIVERY PROCESS

Appendix 3:

BANK INVOLVEMENT IN NATIONAL HOUSING STRATEGY

THE NATIONAL HOUSING STRATEGY

• INITIALLY IT WAS FOUNDED ON TWO PLATFORMS
• GOVERNMENT FACILITATED WITH PRIVATE SECTOR DELIVERY
• DIRECT GOVERNMENT SUBSIDIES WITH OR WITHOUT MORTGAGE LOANS FROM THE BANKS

 

DIRECT SUBSIDY

THE FIRST 5 YEARS OF DELIVERY:

• 1,079,500 SUBSIDIES ALLOCATED
• OVER 700,000 "HOUSING OPTIONS" HAVE BEEN COMPLETED OR UNDER CONSTRUCTION
• IN TERMS OF QUANTITY, THIS HAS WORKED WELL BY COMPARISON WITH INTERNATIONAL DATA

- SINGAPORE 25 YEARS TO DELIVER 585,000 UNITS

- SWEDEN 10 YEARS TO DELIVER 1 MILLION UNITS

• IT IS TRUE THAT THERE HAS BEEN CRITICISM OF QUALITY, AND THIS IS WHERE FURTHER WORK NEEDS TO OCCUR.

 

EXPERIENCE WITH MORTGAGE LENDING

• SINCE LATE 1980'S THE 6 RETAIL BANKS LENT EXTENSIVELY:
• 1994 ROU SIGNED TO ENCOURAGE BANKS TO INCREASE LENDING
• 140,000 MORTGAGE LOANS WITH A VALUE OF R 10 BILLION WERE GRANTED OVER A PERIOD OF 3 YEARS

 

PROBLEMS OF MORTGAGE LENDING TO FIRST TIME HOME OWNERS

• NON PAYMENT DUE TO :

- ECONOMIC HARDSHIP

- RODUCT DEFECTS

- POLITICAL RESISTANCE AND BOND BOYCOTTS

- DIFFICULTIES WITH FORECLOSURE

- LACK OF MARKET RE-SALE

 

NON-PAYMENT PROBLEMS

• 33,000 PROPERTIES IN POSSESSION IN THE 'RING-FENCED BOOK" VALUE
  R 1.3 bn.
• 25,000 PROPERTIES IN POSSESSION OF THE BANKS THEMSELVES

 

LIMITATIONS TO MORTGAGE LENDING FOR FIRST TIME HOME OWNERS

• THE 20 TO 30 YEAR TERM IS TOO LONG
• WILDLY FLUCTUATING INTEREST RATES IN AN OPEN ECONOMY
• THE COMPLEXITY OF THE INSTRUMENT MAKES IT HARD TO UNDERSTAND
• FEWER THAN 10% OF HOUSEHOLDS CAN AFFORD THE INSTALMENT ON A MORTGAGE LOAN USED TO FINANCE A CONVENTIONAL HOUSE
• DEFAULTS PLACE THE BORROWERS HOUSE AT RISK

 

SHIFTING TREND TO "SECURED" MICRO LOANS

• LESS COMPLEX, EASIER FOR THE BORROWER TO MANAGE - E.G. SHORTER TERM AND EMPLOYER LOOKS AFTER THE PAYMENTS
• PAYROLL DEDUCTION LIMITS THE RISK TO THE LENDER
• SECURED WITH PENSION OR PROVIDENT FUND AND NOT WITH BRICKS
• LOW COST ORIGINATION

 

SECURED MICRO LENDING STATISTICS AND LIMITATIONS

• BANKS IN EXCESS OF R 3 BILLION
• NON-BANK LENDERS IN EXCESS OF R 4 BILLION
• THIS HAS INCREASED THE NUMBER OF HOUSEHOLDS WHO CAN AFFORD LOAN FINANCE FROM 10% TO 30%
• LOAN IS LIMITED TO THE AMOUNT OF THE PENSION OR PROVIDENT FUND BENEFITS (AVERAGE LOAN R 8,000)
• REMAINS VULNERABLE TO INTEREST RATE SHIFTS

 

MOVE TO IMPROVE MICRO LOANS THROUGH GATEWAY MECHANISM

• DOUBLE THE SIZE OF LOAN BECAUSE GATEWAY PROVIDES AN ADDITIONAL 50% SECURITY RESULTING IN A SIGNIFICANT INCREASE IN THE HOUSING STANDARD
• NHFC STABILISES THE INTEREST RATE AND EXPOSURE
• THIS WILL FURTHER INCREASE THE NUMBER OF HOUSEHOLDS WHO CAN AFFORD LOAN FINANCE FROM 30% TO 40%

 

BANK INVOLVEMENT IN THE NATIONAL HOUSING STRATEGY

• PLAYED KEY ROLE IN FORMULATING STRATEGY
• GRANTED LARGE NUMBER OF MORTGAGE LOANS
• INTENSELY INVOLVED IN DEVELOPING APPROPRIATE POLICY AND FINANCING INSTRUMENTS FOR GATEWAY AND SOCIAL HOUSING PROGRAM
• WILL ORIGINATE AND ADMINISTER LOANS FOR GATEWAY

 

BANK INVOLVEMENT (CONT.)

• HAVE COMMITTED TO TAKING UP THEIR SHARE OF THE INSTRUMENTS IN GATEWAY AND THE SOCIAL HOUSING PROGRAM
• HAVE RESOLVED TO SUPPORT :
• FAIR LENDING LEGISLATION
• DISCLOSURE OF LENDING
• AN AFFIRMATIVE APPROACH BASED ON SOUND BANKING PRINCIPLES AND LINKED TO COMMUNITY TO RE-PAY LOANS AND GOVERNMENT COMMITMENT TO MAINTAIN THE 'RULE OF LAW'