NATIONAL HOUSING FINANCE CORPORATION

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Presentation to the Housing Portfolio
Committee 3 November 2004
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NHFCs 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

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NHFC Programmes
HOME OWNERSHIP
NHFC
INCREMENTAL HOUSING
ALTERNATIVE TENURE
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NHFC Programmes
Home 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.
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Geographical distribution of HOD Clients
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Geographical distribution of AT Clients
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Geographical distribution of IH Clients
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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

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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.

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Housing Impact 1996 to date
31 March 2004
Funds disbursed R1.7 billion
Housing Opportunities Created 220 675
Number of people benefited 1,103,375
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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.

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Breaking New Ground

1. 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.

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Future Funding Options

• Deposit-Taking institution Retail Option
• Capital Markets
• Issuing of Bonds
• Securitization
• Government Grant and Allocations

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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