Hit for six first-time buyers could soon be in pound seats

JOHANNESBURG (November 20) – For homebuyers in the hit-for-six beleaguered affordable housing market meaningful financing relief is on the way from the Treasury financed National Finance Housing Corporation (NFHC).

Initiated by government in response to traditional home lenders failure to achieve state set lending targets in the affordable market the NFHC is in the process of gearing up to offer 100 percent homeloan packages of up to R400 000 plus a further ten percent of the loan value to cover transfer costs of ownership.

Announcing details of the new financing source at a recent RE/MAX seminar, Marsha Haupt, director of mortgage originator Betterbond was hopeful, given the dire need for finance access in this market, that the ceiling would be lifted to R600 000. Betterbond, who have entered into an origination contract with the NFHC, is assisting with the initial set up and processing systems at the Corporation.

The package will be marketed at interest rates of prime minus two percent to prime plus two percent depending on the risk profile of the borrower. Determining factors for qualification is incomes, at this stage only up to R15 000 monthly, and maximum price value of the home. If, as Haupt anticipates, the loan ceiling is raised to R600 000 this would then qualify buyers with monthly incomes of R20 000. The loans are available to the general market and include existing and newly built homes, but not investors.

Haupt says the ten percent of the bond available for costs forms a separate loan, which the borrower is required to repay to NFHC over a maximum period of 36 months.

A feature of the financing is that loans will be granted on a different credit scorecard to that currently being used by major lenders observing conditions of the National Credit Act. NFHC grants will be more sensitive to adverse judgements and bad payment profiles of applicants with strong emphasis on the length and stability of employment of the aspirant buyer.

Haupt says the R400 000 to R600 000 price category currently accounts for “a good five percent” of Betterbond’s origination business.

Both Haupt and Jean van Jaarsveldt, assistant regional director of RE/MAX of Southern Africa, believe the NFHC initiative could act as a vital kick-start to the lower market end’s sluggish conditions plagued mainly by homeloan credit qualifications.

Most importantly, as far as van Jaarsveldt is concerned, the positive knock on effect into the higher priced market categories could prove substantial. He cites credit-squeezed market stagnation in both township and lower-end traditional markets as the single biggest restraint on current sales volumes.

Article from: www.rodneyhayter.com