Presentation to the National Council of Provinces

12 JUNE 2002

Agenda

1. Mandate and Mission

2. NHFC Context (as Gazetted) :• NHFC Primary Responsibilities

3. The External Environment

4. The Housing Finance System - SA

5. The Housing Institutional Environment

6. Strategies and Action Plans

7. Conclusion

Mandate

In partnerships with the broadest range of organisations, to search for new and better ways to mobilise finance for housing, from sources outside the state...

“The corporation’s endeavours should in time ensure that every South African with a regular source of income can gain access to finance for buying or renting or incrementally building or improving his/her own home”

Mission

The NHFC seeks to create housing opportunities for the low and moderate income families by: FundingFunding or UnderwritingUnderwriting the funding of intermediaries and institutions to promote broader access to housing and housing finance FacilitateFacilitate the building of Adequate and Sustainable capacity within the organisations and institutions that it funds PartneringPartnering organisations and institutions to deliver innovative housing finance solution options

NHFC Primary Responsibilities…

Stimulate the Primary and the Secondary

market in the low and moderate income housing

sector: Provide alternative need- based housing finance Provide alternative need- based housing finance

products and financial packages:-products and financial packages:- mortgage and non- mortgage products (loan

discounting and purchasing from lenders, direct

intermediary funding) rental product options (project financing for

rental or rent to buy and installment sale) provide credit to lower income earners building

or developing properties incrementally – PHP,

individual initiatives and through rapid land release

(generally micro-finance)

NHFC Primary Responsibilities…

Undertake the funding as a wholesale

intermediary and act as a fund manager Specialise in identifying, assessing, pricing,

monitoring and managing the risks associated

with the placement of funds Research and Product development

NHFC Primary Responsibilities…

Stimulate the Primary and the Secondary

market in the low and moderate income housing

sector (contd.) : On-going product development Support management capacity of niche lenders Promote and develop partnerships with financial

institutions and other stakeholders to improve

financing capacity to income groups

Overview of the Operating Environment…

External Environment…External Environment… Shrinkage of the housing finance delivery Shrinkage of the housing finance delivery

channels into the NHFC’s target market :channels into the NHFC’s target market : Demise of small banks Saambou, Unifer, FBC, etc.Demise of small banks Saambou, Unifer, FBC, etc.

Market Consolidation – e.g. CashbankMarket Consolidation – e.g. Cashbank

Inadequate capacity of niche lenders to Inadequate capacity of niche lenders to

take-over the increased gap to financetake-over the increased gap to finance

Negative impact of Unemployment and Negative impact of Unemployment and

HIV/AIDSHIV/AIDS

High-risk perceptions of the Low and High-risk perceptions of the Low and

Moderate income financing sector – Cost of Moderate income financing sector – Cost of

funds highfunds high

Overview of the Operating Environment…

External Environment…(contd)External Environment…(contd)Housing Policy – HLMDA, CRA and evolving Housing Policy – HLMDA, CRA and evolving

policy on Social Housingpolicy on Social Housing

Zero Transfer duty on less R 100 000 house Zero Transfer duty on less R 100 000 house

value and value and

Stamp duty abolished for certain mortgage Stamp duty abolished for certain mortgage

transactions between institutionstransactions between institutions

Stability of some of the niche lenders in Stability of some of the niche lenders in

long term funding emerginglong term funding emerging

Alternative tenure options for the end Alternative tenure options for the end

beneficiariesbeneficiaries

The SA Housing Finance System

Capital Markets (Banks,Investors, Life/Pension Funds

REGULATION Parastatals(other DFIs)

Govt

Loan secured by property, lower LTV

ratiosLending

Institutions

LOAN ORIGINATION

LOAN SERVICING

BANKS

Non Mortgage Security

NON-BANKS

NGOs

DepositorsDepositors Borrowers

SubsidyBeneficiaries

The Housing Institutional Environment

Rent

Own

Mobilisation of ConstructionFunding

Stabilising the HousingEnvironment

Servcon

Property in Possession

NURCHA

NHBRC

THUBELISHA

Right sizing

DEVELOPER (Bridging Finance)

RURAL HOUSINGLOAN FUND

End-userGuarantees

Financialintermediary

Capacity Building

Ensure Quality Housing

Funding or Guarantee the Funding

SOCIAL HOUSINIG FOUNDATION

Rural Micro-Finance

Strategies and Action Plans… Prudently, grow the lending business of the Corporation Prudently, grow the lending business of the Corporation

and thus improve on its housing delivery impactand thus improve on its housing delivery impact Increase the number of housing institutions and lenders

across all Provinces

Facilitate the development of capacity of Housing Institutions, Primary and Niche Lenders (Standards and Guidelines)

Continuously enhance the Risk Management capacity and Continuously enhance the Risk Management capacity and

competency of both the NHFC anud or clients’competency of both the NHFC anud or clients’

Accelerate the Accelerate the medium densitymedium density housing development – housing development –

thru the Job Summit Social Rental Housing Projectthru the Job Summit Social Rental Housing Project

Continue to pilot pragmatic PPP models that will deliver :Continue to pilot pragmatic PPP models that will deliver : Affordability

Value for Money, and

Risk Sharing

Proactively undertake Housing Finance Research and Proactively undertake Housing Finance Research and

Product DevelopmentProduct Development

THANK YOU

QUESTIONS…

Indicator Now Target 2002/3

Cum. Approvals R 1.5bn R 1.9bn

Cum. disbursement R 1bn R 1.5bn

No of houses delivered

80 397 90 500

No of loans granted 195 043 205 000

No of new Intermediaires

25 28

Undertaking Wholesale Funding…

NHFC’s Performance…

NHFC Housing Impact – TO-DATE

HOUSING IMPACTHOUSING IMPACT TOTAL TO DATETOTAL TO DATE

Complete housing units financedComplete housing units financed 80, 39780, 397

Incremental housing loans Incremental housing loans grantedgranted

489 480

Number of people benefitedNumber of people benefited 2,47 million2,47 million

NHFC’s Performance…

Budget Highlights…

Priorities of the Corporation…

Prudently, grow the lending business of the Corporation and thus improve on its housing delivery impact

Continuously enhance the Corporation’s Risk Management capacity and competency

Attain accelerated delivery on the Job Summit Pilot Project

Effectively implement the Corporations processes and systems – Drive Speed, Flexibility and Impact

Focus on the need to challenge, develop and retain the best people in the Corporation

Improve the Corporations Marketing and Communication with all its Stakeholders

Budget Overview 2002/5

• Deliver housing finance to a cumulative total of 334,000 households (of which 30,500 new and 7,500 existing houses) in most provinces;

• Facilitate the building of capacity in the housing and housing finance sector by supporting 11 new and emerging housing finance intermediaries and housing institutions;

• Change the housing finance environment through promoting new loan products, relevant delivery channels, supporting appropriate regulatory & policy frameworks and new housing options.