Presentation to the Presentation to the Housing Portfolio CommitteeHousing Portfolio Committee

3 November 20043 November 2004

NHFC’s Primary Responsibilities…

• To promote increased access to housing finance through the banking system for the benefit of low income households

• To fund or underwrite the funding of specialized alternative lenders able and equipped to operate where banks find it difficult to operate;

• To develop and appropriately fund institutions delivering tenure options other than individual freehold; and

• To facilitate a sustainable and growing housing finance sector for the mobilisation of funds into the housing process

NHFC Programmes

NHFC

HOME OWNERSHIP

INCREMENTAL HOUSINGALTERNATIVE TENURE

NHFC ProgrammesHome Ownership Extends credit through accredited intermediaries

for mortgage and non-mortgage loans for existing or new houses, collateral provided by pension fund guarantees, mortgage bonds and insurance cover.

Alternative Tenure In association with social housing institutions and accredited financial institutions, creates housing finance opportunities for forms of tenure other than direct ownership such as Rental, Rent-to-buy, Instalment Sale and Cooperatives.

Incremental Housing Through accredited micro-lenders, extends credit for building homes on an incremental basis or to extend or improve existing property, or top-up credit for discount benefit or capital subsidy beneficiaries.

Geographical distribution of HOD Clients

Geographical distribution of AT Clients

Geographical distribution of IH Clients

Stimulate and lead informed debate on LIH Housing Sponsor Housing Finance Forums :

Quarterly Forums

Annual Housing Symposiums (1st and 2nd)

Key Research Studies :

Reasons for defaults in Social Housing (May 2003).

Borrowers Survey. To identify blockages and investigate obstacles that impede delivery of formal housing (Aug 2003).

Township Residential Property Market. To understand dynamics of township property markets and develop policy and strategy which would result in better workings of housing markets in these areas (June 2004)

Quarterly publications on topical issues in housing finance

Advocacy and Enabling Arrangements

Facilitate the quantification and therefore appropriate pricing of risk in the LIH sector

Promote “enabling” arrangements and policy initiatives that would facilitate better access and affordability of housing finance for the LIH

Develop information tracking systems for ongoing risk evaluation to improve data on riskiness of the sector.

• Funds disbursed R1.7 billion

• Housing Opportunities Created

220 675

• Number of people benefited 1,103,375

Housing Impact 1996 to date

31 March 2004

Job Summit

What we are doing:

• Agent for NDoH on Job Summit;

• Managing grant and subsidy funding for the Job Summit;

• Supporting and engaging in the development of sustainable and adequate capacity of housing institutions;

• Contributing to the formulation of social housing policy.

Breaking New Ground1. Guarantee Programme – Loss limit mitigation instrument being

developed by NHFC to facilitate finance in secondary property market.

2. Possible Retail Intervention – Direct intervention by NHFC in providing home loans to borrowers being considered by NHFC.

3. Informal Settlement Upgrading – The housing consolidation process contemplated in phase 4 will be considered for incremental based housing finance.

4. Inner City Regeneration – Aligning NHFC investments with urban development zones and possible role in facilitating inner city localized funding interventions.

5. Development Fund – Facilitate the capitalization of housing intermediaries for sustained delivery and promoting deeper outreach of housing finance.

Future Funding Options…

Deposit-Taking institution – Retail Option

Capital Markets Issuing of Bonds Securitization

Government – Grant and Allocations

Audited Financial Results

Income Statements (R000s) 2004 2003

Net Interest Income 212,231 213,407

Impairments in terms of AC133 (15,962) (45,359)

196,269 188,698

Operating Costs (60,034) (56,083)

Net Income before Tax 136,235 132,615

Taxation (35,841) (34,687)

Income Attributable to Shareholders 100,394 97,928