Harry Kellan
FNB continues to improve access to affordable housing for low- to middle-income South Africans amid rising property prices and economic challenges. Through partnerships, tailored financial solutions and technology – driven processes, FNB aims to address the country’s significant housing shortage and promote homeownership across diverse communities.
According to the Department of Human Settlements White paper on land and fixed matters 2024, there are still more than 3.4 million South Africans on the housing needs register which represents a backlog. In response, industry bodies like the Banking Association of South Africa (BASA) are intensifying efforts with various financial institutions to foster partnerships, enhance economic participation and improve financial literacy.
The bank believes that owning a home is the foundation to improved living standards and financial security, and the bedrock for creating generational wealth. A focused strategy to assist low-income households in purchasing homes in the primary and secondary markets has resulted in an affordable housing book of R21.9 billion as of 30 June 2024, representing 69 429 low-income households. This growth focuses on households who earn a monthly income of up to R32 000, reflecting the bank’s commitment to making home ownership a reality for all South Africans.
Low economic growth coupled with high living and building costs has created a challenging environment for financial institutions to ensure effective delivery of affordable housing to communities. However, recent interest rate cuts and broader positive sentiment indicate signs of economic improvement, boosting confidence in home ownership, particularly for low-income earners.
As a leading financial institution, we remain committed to driving economic growth and social inclusion through our affordable housing initiatives. Government subsidies have been integrated into affordable housing lending processes to improve affordability for customers. In addition, the continued trend of urbanization is expected to drive housing demand and contribute to price inflation in the market. To help address these challenges, we are committed to deliberate collaboration with property developers, city councils and fintech’s to create sustainable housing solutions that will improve affordability and accessibility.
One such initiative is First Home Finance (FHF), which provides critical financial support to customers in need. In 2024, FNB advanced over R1.1 billion leveraging R76 million from FHF, which financed a total of 1 075 homes. While the majority of FNB Personal Segment customers may qualify for FHF, awareness remains a challenge. FNB is working to increase awareness and education around this offering to help eligible South Africans benefit from this opportunity.
Additionally, FNB offers a Collective Buying Home Loan solution, enabling up to 12 customers to purchase property and share monthly repayments together. This approach has proven beneficial for affordable housing customers to achieve their financial goals; and has particularly been helpful for those customers facing rising interest rates and affordability constraints.
Such initiatives help accelerate homeownership, and economic stability, as homeowners build equity over time, reducing wealth inequality. Property values in the affordable segment have consistently outpaced inflation in the last 5 years, with properties valued at R250k or less returning over 12% in the first half of 2024 alone. Expectations of continued easing in interest rates should further support property demand in these segments.
FNB is committed to making home ownership a reality for all South Africans. By fostering economic growth and social stability, FNB’s affordable housing initiatives are empowering communities and helping customers achieve the dream of owning a home.
Harry Kellan, FNB CEO. He writes in his personal capacity.
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