Moving Forward

Moving Forward

Moving Forward

But, for the industry to grow and move forward, Standard Bank sees restoring value' in the mortgage offering across the industry as essential. An important factor for future consideration is to improve on customer value propositions at the lower end of the markets and to actually meet the demand for housing-related funding requirements in this sector. Unconventional banking products such as more untitled dwellings than titled should be considered, since alternative solutions including mortgage finance is not always the appropriate offering.

Ntombela says the growing affordable housing market sector would benefit from banks re-visiting origination costs, as well as reducing building costs and moving more towards environmentally friendly building methods and unconventional material to benefit the end-user. She says simplicity of product offerings is not only essential to this market, but to the whole home loan business and these will become more prominent in future.

Similar to other major banks, Standard Bank offers 100% home loans where the loan amount is less than R1.5 million, and subject to the risk assessment of the customer, ensuring only qualifying applicants receive 100% bonds. This policy is regularly reviewed and may be amended at some point in the future. For lenders to manage their loan repayments, Standard Bank recommends a fixed rate option to avoid the impact that rising interest rates may have on customers' monthly cash flow.

Ntombela says to keep defaults at this end of the market to a minimum, prudent and proactive credit risk management remains essential. Applicant's credit history is taken into consideration, complete with detailed income and expenditure information, confirming that loan repayments are affordable within their current budget. Repayment by debit order or salary deduction is compulsory, ensuring correct payments that have been adjusted to accommodate interest rate changes are made consistently, to minimise defaults. In addition, customers who fall into arrears are contacted speedily and, when necessary, are offered face-to-face educational sessions where all available options are explored. Standard Bank Home Loans offer credit life insurance to protect customers against default in the event of a variety of life events, such as disability, death, dread disease or retrenchment.

In combating the effects of the economic downturn possibly resulting in repossessed homes, Standard Bank pre-empted a potentially high-risk situation in the early stages by introducing a rehabilitation programme for customers unable to honour their home loan commitments. The benefit of this programme is that customers were able to structure payments based on their personal circumstances thereby avoiding an adverse credit rating or having their home repossessed.

Standard Bank strongly encourages its clients to contact the bank at the earliest stages of experiencing financial difficulty in meeting their debt obligations. This enables the bank the opportunity to assess the requirements and timeously structure a deal that meets the requirements of both customer and bank, minimising possible foreclosure.

About the future of affordable housing funds, Ntombela says commercial banks have to look at alternative non-traditional methods to assist with affordability, and assisting customers in building a credit history. Such funds may become common in the future as more institutions will review its offerings beyond end-user finance, extending the credit eligibility of potential customers.

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