FNB's collective buying home loan product, launched almost five years ago, has granted over R1bn in loans to date. This innovative product allows up to 12 people to buy a home together and share monthly repayments, making it more affordable for customers to achieve their financial goals. The lender has seen significant uptake, with an average of three individuals per application. According to FNB, this product has been particularly helpful for affordable housing customers facing rising interest rates.
In the year to end-June, FNB advanced R227.6m to groups buying as a collective. The average price of a home purchased through this product was R1.29m. Gauteng led the pack, accounting for 58% of applications, with a total of 104 groups buying property. FNB's internal data shows that applicants for the product can choose to pay via one debit order or salary deduction, or opt for the split-bill repayment function, which allows multiple debit orders to make up the repayment.
The R1.3-trillion mortgage market in South Africa has seen innovative and disruptive solutions emerge in recent years. Standard Bank dominates the market, financing one in every three home loans in the country. However, FNB's collective home loan product has broken new ground, offering consumers a unique way to invest in property. Other banks, such as Discovery Bank, have also launched innovative products, including personalised home loan interest rates based on behavioural models.
Discovery Bank's home loan product has made significant headway in the market, with its home loan book topping R4bn in advances in the year to end-June, up 129% year on year. The bank's home loan product has been driven by its Vitality Money behavioural model, which offers personalised interest rates. Discovery Bank's latest results show that 73% of its new home loans were issued to superprime clients, the highest proportion in the market.
The South African mortgage market is highly competitive, with major banks such as FNB, Absa, and Nedbank holding a large share of the market. Investec also holds a significant share in the high-net-worth market, while Capitec has expressed interest in expanding its presence in the home loans market. The market has seen significant growth, driven by innovative products and solutions.
FNB has focused on building a savings culture within its customer base, with its retail and commercial deposit franchise being the largest in South Africa. The bank's collective home loan product has been a key driver of growth, offering customers a unique way to invest in property. According to FNB, the product has been particularly popular among affordable housing customers.
The growth of the mortgage market is expected to continue, driven by innovative products and solutions. Discovery Bank's home loan book has seen significant growth, with a credit loss ratio of just 0.15%. The bank's results show that 71% of its home loans are bonds switched from other banks, reflecting its appeal to established homeowners looking for a better deal.
Key points
- FNB's collective home loan product has granted over R1bn in loans to date, with Gauteng leading demand.
- The South African mortgage market is highly competitive, with major banks holding a large share of the market.
- Innovative products and solutions are driving growth in the mortgage market.
