BusinessDay - FNB calls for state-backed mortgage insurance fund

BusinessDay - FNB calls for state-backed mortgage insurance fund

FIRST National Bank (FNB), the second-largest provider of affordable housing loans, yesterday called for the creation of a state-backed mortgage insurance fund to stimulate banks to increase funding for people who do not own homes.
In addition, the government should fund the construction of infrastructure and help to secure suitable land to build houses, particularly for the gap market of people earning between R3500 and R10000 a month.
These comments were made by the CEO of FNB Housing Finance, Marius Marais, in response to a target set by Human Settlements Minister Tokyo Sexwale for banks to grant up to 600000 housing loans in the next three years for this market. The people in this category either earn too much to qualify for a housing subsidy or do not easily qualify for mortgage loans from banks.
Mr Sexwale told the recent 43rd annual conference of the South African Property Owners Association in Cape Town that banks should find a way to assist this market.
Mr Marais said that, in principle, he supported the minister’s objective to provide accommodation. But, in reality, it was easier said than done. He said there were "many issues" that inhibit the growth of affordable housing which were beyond the capability of financial institutions to solve. These issues needed to be addressed directly by the government, Mr Marais said.
Among these was the lack of a state -backed mortgage insurance fund that, among other objectives, would provide risk cover against defaulting clients, particularly by those who are retrenched. The government is considering creating such a fund, with seed capital of up to R1bn.
Mr Marais said that in addition to securing land, the government needs to fund the provision of infrastructure such as roads, water, electricity and sanitation.
Estimates from FNB show there are about 13-million households in SA. Of those, about 1-million fall in the high-income category, earning above R16000 per month.
"In the middle-income category we have around 3-million households earning between R3500 to R16000 per month.

Keywords - FIRST National Bank, FNB, affordable housing loans, affordable housing, loans, Marius Marais, Human Settlements Minister, Tokyo Sexwale, state -backed mortgage insurance fund, moladi, alternative

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