Absa will offer a rebate on loans to homeowners that purchase eco-friendly or green-certified homes, the bank said on Wednesday.
This is part of a R4.5 billion deal between Absa and the World Bank's private investment arm, the International Finance Corporation (IFC).
FirstRand has entered into a similar deal with the IFC - securing a R4.6 billion loan that would go toward promoting green housing.
"This three-year initiative, which takes the form of a rebate to customers, will support prospective homeowners with the purchase of green-certified homes through the UK-IFC Market Accelerator for Green Construction (MAGC) programme," Absa said in a statement.
The MAGC programme specifically promotes the development of green buildings in emerging markets as a means to respond to the climate crisis by reducing greenhouse gas emissions associated with the construction sector. These buildings would typically use less energy and water.
Practically, customers who purchase properties valued at less than R5 million, using an Absa-approved Eco Home Loan, are eligible to receive a rebate of between 1.5% to 3% on their home loan amount.
"This incentive will be credited directly into the customer's home loan account and capitalised against the outstanding balance, thus reducing their loan amount and saving them further interest over the term of their mortgage," Absa said.
This rebate is over and above a 0.25% concession that is already offered through the Eco Home Loan, which Absa first launched in 2020.
A 1.5% rebate would be applied at the registration of the loan and then another after 36 months - bringing the total rebate to 3%.
Applicants can qualify for a rebate of up to 3% (up to R55 000) of your loan amount.
The bank noted that 1.5% of your loan will be paid once the development has reached the initial stage of the certification process and an additional 1.5% of your rebate will be paid once the development has reached the final stage. "You can save up to R114 071 on a R1 000 000 Eco Home Loan," it said.
The IFC estimates that the broader project with Absa could potentially reduce South Africa's annual emissions by over 12 000 tonnes.
In the case of FirstRand, the IFC will provide a $250 million senior loan to South Africa's second largest bank by balance sheet, to further scale-up the bank's lending to property developers and home buyers for green buildings.
Designated portions of the home loan portfolio will be specifically allocated to the affordable housing segment and to women.
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