More Home Loans for lower-income groups

SA Home Loan news

In September this year a memorandum of understanding (MOU) was signed between the four major SA home loan providers and the Housing Department, which will pave the way for greater access to mortgage finance in the lower-income markets.

After months of consultations and engagements between housing minister Lindiwe Sisulu and representatives from the four major banks – FNB, ABSA, NEDCOR & Standard Bank – an agreement was signed which will see about R42-billion in home loans being made available for households in the R1 500 to R7 500 income bracket.

According to a statement from the housing minister, the banks are also working towards the elimination of the refusal of granting home loans on the basis of geographical area.

This should cause an increase in housing developments in poorer areas, because the number of potential home owners would have increased.

Often banks will insist that some home loan insurance be taken out before the mortgage is granted, and therefore the MOU states that affordable home insurance options are also provided, to ensure the target market receives a complete home loan product.

The MOU has committed Banks and government to:
• Support wealth generation through home ownership
• Stimulate home building
• Support the house markets and;
• To provide affordable insurance products for the target market.

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