Mortgage loan performance in South Africa: detailed workbook

This detailed workbook provides additional analysis to the second report on the performance of mortgages granted to lower income households in South Africa since 2004.  In addition to what is covered in the report, this workbook explores performance among additional dimensions, such as loan amount and borrower demographics (age and gender).

Like the first report, this analysis finds that mortgages granted to lower income households have on average performed in line with the market as a whole.  However, this analysis allows for a more nuanced comparison of performance that also highlights some key differences across the market.  Using credit bureau data for mortgages issues by the big four banks (Standard Bank, Nedbank, FNB Bank, ABSA bank), the analysis is more robust than previously, as like-for-like data has been used and the methdology to derive performance metrics is aligned.  Further, this report introduces a second portfolio, namely mortgages issued to the so-called “Affordable” Market in South Africa, between 2009 and 2011.

While the analysis provides a fact base as a starting point, it is critical that lenders and policy makers actively engage with the findings.  This engagement will contribute immeasurably towards developing a shared understanding of the level of risk associated iwth lending to lower income market segments, the relationship between underwriting criteria and performance, and the identification of mechanisms that can enhance sustainable access to mortgage finance by low income earners in South Africa.

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