Rand Merchant Bank (RMB) has entered into a loan agreement with two international banks to implement an affordable housing-loan scheme for low-income earners.
Spokesperson Kevin Wiles said on Monday that the multimillion-rand scheme is to benefit South Africans earning between R2 000 and R8 000 per month.
”The R630-million project will unlock the construction of 15 000 homes and give more than 1 000 low-income earners access to home loans,” he said.
Wiles said RMB has agreed to borrow â,¬33-million of long term funding from the Dutch Development Bank (FMO) in The Netherlands and another â,¬40-million from the French Development Agency (AFD).
”The loans are directly linked to RMB’s established track record in the use of risk management and investment banking expertise to make the construction and ownership of affordable housing financially viable,” Wiles said.
He said RMB has credit-approved 13 projects using a risk model that focuses on key risk-management factors — such as home ownership education, community involvement, ”rigorous quality control and the vetting of credit worthiness of applicants”.
”Another 37 projects are in the pipeline and this drives the need for additional funding,” Wiles said.
RMB has devised two innovative financing solutions that will ”enable the money to be pumped into affordable housing with minimum risk and maximum benefit to homeowners”.
The first solution, he said, is to use the â,¬33-million from FMO to produce the ”total project funding”.
”The securing of the money upfront allows for competitive costings of supplies, services and guaranteed prompt payment,” Wiles said.
He said the â,¬40-million credit from AFD will then be used to solve any problem associated with low-income home loans of applicants whose creditworthiness ”while good, is just shy of acceptable norms”.
”RMB will use the French money to give financial assistance to such people, making them eligible for home loans they otherwise would not qualify for,” he said.
Wiles said the overall objective of the projects undertaken by RMB is to allow for the roll-out of ”a sustainable model for affordable housing”. – Sapa