Presentation to the National Council of Provinces

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• Presentation to the National Council of Provinces
• 12 JUNE 2002

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Agenda

• Mandate and Mission
• NHFC Context (as Gazetted)
• NHFC Primary Responsibilities
• The External Environment
• The Housing Finance System - SA
• The Housing Institutional Environment
• Strategies and Action Plans
• Conclusion

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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 corporations 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

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Mission

• The NHFC seeks to create housing opportunities
  for the low and moderate income families by
• Funding or Underwriting the funding of
  intermediaries and institutions to promote
  broader access to housing and housing finance
• Facilitate the building of Adequate and
  Sustainable capacity within the organisations and
  institutions that it funds
• Partnering organisations and institutions to
  deliver innovative housing finance solution
  options

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NHFC Primary Responsibilities

• Stimulate the Primary and the Secondary market
  in the low and moderate income housing sector
• Provide alternative need- based housing finance
  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)

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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

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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

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Overview of the Operating Environment

• External Environment
• Shrinkage of the housing finance delivery
  channels into the NHFCs target market
• Demise of small banks Saambou, Unifer, FBC, etc.
• Market Consolidation e.g. Cashbank
• Inadequate capacity of niche lenders to
  take-over the increased gap to finance
• Negative impact of Unemployment and HIV/AIDS
• High-risk perceptions of the Low and Moderate
  income financing sector Cost of funds high

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Overview of the Operating Environment

• External Environment(contd)
• Housing Policy HLMDA, CRA and evolving policy
  on Social Housing
• Zero Transfer duty on less R 100 000 house value
  and
• Stamp duty abolished for certain mortgage
  transactions between institutions
• Stability of some of the niche lenders in long
  term funding emerging
• Alternative tenure options for the end
  beneficiaries

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The SA Housing Finance System
Capital Markets (Banks, Investors, Life/Pension
Funds
Parastatals (other DFIs)
Govt
REGULATION
Loan secured by property, lower LTV ratios
Non Mortgage Security
Lending Institutions
BANKS
NON- BANKS
NGOs
LOAN ORIGINATION
Subsidy Beneficiaries
LOAN SERVICING
Depositors
Borrowers
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The Housing Institutional Environment
Funding or Guarantee the Funding
Own
Financial intermediary
Rent
RURAL HOUSING LOAN FUND
Rural Micro-Finance
Capacity Building
SOCIAL HOUSINIG FOUNDATION
Mobilisation of Construction Funding
NHBRC
Ensure Quality Housing
DEVELOPER (Bridging Finance)
End-user Guarantees
NURCHA
Stabilising the Housing Environment
Servcon
THUBELISHA
Property in Possession
Right sizing
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Strategies and Action Plans

• Prudently, grow the lending business of the
  Corporation and 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 competency of both the NHFC anud or clients
• Accelerate the medium density housing
  development thru the Job Summit Social Rental
  Housing Project
• Continue to pilot pragmatic PPP models that will
  deliver
• Affordability
• Value for Money, and
• Risk Sharing
• Proactively undertake Housing Finance Research
  and Product Development

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THANK YOU
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QUESTIONS
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Undertaking Wholesale Funding
NHFCs Performance
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NHFC Housing Impact TO-DATE
NHFCs Performance
HOUSING IMPACT TOTAL TO DATE
Complete housing units financed 80, 397
Incremental housing loans granted 489 480
Number of people benefited 2,47 million
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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 Corporations 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

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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.