Standard Bank to relax lending criteria

Standard Bank has recently increased its risk acceptance rate in its Home Loan and Credit Card divisions. The changes made to Standard Bank’s risk appetite have been specifically designed to benefit first–time entrants into the housing and general credit markets.

Peter Schlebusch, Chief Executive, Personal and Business Banking, Standard Bank South Africa, says: “It is important that we support and provide access to finance to the lower end of the economic spectrum. People in this sector have been hardest hit by higher inflation, job losses and the general slowdown in the economy. Standard Bank is committed to providing access to finance and financial services to the low income market, while continuing to focus on prudent risk, capital and liquidity management.” 

The following adjustments have been made:

• Jump Start bonds (first–time home owners) up to R1m home loans and who are using this as their primary residence are now able to qualify for a cost–inclusive 104% LTV (loan–to–value) loan.
• Affordable housing: Standard Bank is now allowing LTVs of 100% (up from 90–95%).
• Standard Bank has upwardly revised its LTVs on new home loans. Customers using internal Standard Bank channels with home loans of under R1.5m can qualify for LTVs of 100% (up from 90–95%). Houses of R1.5m–R2.5m will however still require a 10% deposit, and >R2.5m home loans will still require a 20% deposit.
• Standard Bank has started accepting low–risk non–cheque Standard Bank customers and low–risk non–Standard Bank customers for home loans.
• With credit cards, Standard Bank is increasing its risk appetite by raising the “acceptable” bad debt ratio by 3% on new business written in a select entry–level segment of the portfolio.

Sim Tshabalala, Chief Executive of Standard Bank in South Africa, says: “We believe that an economic recovery will be slow but we see medium term improvement among households, as affordability improves on the back of lower interest rates. We have taken proactive steps to capitalise on this improvement.”

Standard Bank has accepted the tender proposals for origination business from BetterBond, Bond Choice and Multinet, all three of which commenced submitting home loan applications from 24 August 2009. Standard Bank believes the new rates negotiated with mortgage originators will allow for a sustainable long term business model.