FNB reports a rise in affordable housing lending as first-time buyers capitalise on low interest rates

FNB says home loans it advanced to customers in the affordable housing income bracket earning between R3 501 and R26 100 a month increased from R32.2 billion in 2020 to R34.8 billion in 2021, as qualifying customers took advantage of low interest rates.


Raj Makanjee, FNB Retail CEO, says, "Our commitment to putting our customers in homes includes a deliberate effort to tailor solutions for those who often find it difficult to afford to buy a property. As a result, our property lending solutions incorporate government subsidies such as the Finance Linked Individual Subsidy Program (FLISP) as well as our Collective Buying solution to help customers in qualifying income segments improve their affordability. While demand for affordable housing has remained strong over the years, the past two years of historically low interest rates have enabled many people to achieve their dream of home ownership."


Lee Mhlongo, CEO of FNB Home Finance, says, "FLISP is a government subsidy aimed at consumers earning between R3 501 and R22 000 a month. These consumers earn more than the qualifying income for social housing but not enough to afford a privately developed property. As such, we actively encourage our customers to use FLISP to supplement their home purchase or reduce the balance on a home loan. According to our data, the majority of our individual customers in the relevant income bracket may be eligible for FLISP. Between June 2020 and May 2021, we facilitated R29 million in FLISP disbursements to our customers in affordable housing loans valued at R226 million. There’s a greater opportunity for many more customers to take advantage of this benefit.

Similarly, we’re also collaborating with several partners to increase property supply in the affordable housing income bracket. In this regard, our efforts are focused on supporting emerging property developers and increasing affordable housing delivery to reduce the estimated backlog. We will have exciting announcements about these initiatives in the near future," adds Mhlongo.

In its recent interim results, FNB reported record pay-out levels in residential mortgages for the period under review, supported by low interest rates, growth in first-time home buyers and a catch-up in new registrations at the deeds office. While South Africa is in the midst of a rate hike cycle with rising inflation, interest rates are still relatively low compared to the pre-Covid period.