Filling the gap
The revision of First Home Finance (previously known as FLISP) this year, is anticipated to stimulate and turn potential first time home buyers’ dreams, into reality.
Filling the gap
The revision of First Home Finance (previously known as FLISP) this year, is anticipated to stimulate and turn potential first time home buyers’ dreams, into reality.
”If properly implemented, First Home Finance has a potential to significantly re-engineer the housing market by expanding to the previously excluded individuals/households. The housing gap market is on the increase and the supply both in terms of stock and finance has neither been sufficient nor accessible.”
Minister of Human Settlements, Mmamoloko Kubayi
The housing inadequacy in South Africa touches everyone’s heart. With government financial resources constrained, fewer people are likely to receive an RDP house from government, which is granted to those earning less than R3 500 a month. Those earning R1 more and who do not qualify for a traditional home loan, fall into the so-called ‘gap’ market, which has a household income ceiling of R22 000.
This is a severely compromised sector, whose primary housing challenge is on the demand side of affordability. Even the cheapest newly built homes cost a minimum of R2 500 per square metre, dependent on a number of variables.
Absa recognises that the challenges faced by the gap market’s dream of owning a home for the first time, are largely macro-economic market shifts. These include inflation, increasing electricity tariff rates and fuel prices, load shedding, and the recent interest rate hikes. In this scenario their dream of homeownership would remain simply a dream were it not for a government subsidy programme that assists first time home buyers to enter the market.
Called First Home Finance, it is a replacement of the 2012 Finance Linked Individually Subsidy Programme (FLISP) also known as Help-Me-Buy-A-Home. Initiated by the Department of Human Settlements through its entity the National Housing Finance Corporation (NHFC), the new programme increases the subsidy scale upwards of R38 911.00 to R169 265.00.
Zydah Manuel
Portfolio Manager at Absa Home Loans
Zydah Manuel, Portfolio Manager at Absa Home Loans says that First Home Finance has great potential to unlock opportunities for first time buyers, and that it speaks directly to Absa’s drive, which is to house the nation. “It will certainly stimulate transactions in the housing sector and expand the affordable housing and first time home buyer market, which is great news for the currently sluggish housing sector, and of course, the economy.
“We also anticipate some upward mobility relative to both the primary and secondary housing markets, but more importantly, it extends the potential of homeownership.”
Absa is promoting the First Home Finance option vigorously by including the programme into its sales onboarding journey. Here consumers first need to apply for the subsidy before a home loan application can be made. “However, many positive aspects emerge as a result of a successful application,” says Manuel.
“Firstly, Absa supports wealth creation through the financing of residential properties, which enables access to property ownership for more South Africans. Absa is also an active partner within the housing ecosystem to support the communities we serve.
“This means we are very considerate of the financial means by which first time homeowners will fund the balance of their home purchase,” says Manuel. “We take into account their unique circumstances and how the First Home Finance subsidy is disbursed according to the different housing types.
“Absa is also very aware of the uncertainty that potential first time homeowners experience during the buying process be that with or without the First Home Finance subsidy,” confirms Manuel. “Our podcasts and customer articles (accessed via www.absa.co.za) are designed to equip them with information and tools to make the process less overwhelming.
“Our consultants are empathetic to the plight of the gap market and can help new buyers to structure their finances, handhold them through any processes or challenges in their home buying journey and their application for the First Home Finance.”
Applications for the First Home Finance subsidy can be applied for online: https://www.nhfc.co.za/finance-solutions/first-home-finance/
