Discovery Bank says home loan clients will be able to reduce their interest rates "when you manage your money well".
The digital bank is expected to launch its mortgage product by the end of April, in partnership with SA Home Loans, which is 50% owned by Standard Bank.
The financial services group is expected to offer home loans this month. The bank announced in
February that it reached the milestone of 2 million accounts - after announcing its first million accounts in June 2022.
Interestingly, it noted that the last 100,000 accounts came in a little over a month.
This, it said, reflects the relevance of Discovery Bank's shared-value model in providing clients with truly innovative banking solutions that not only meet their financial needs, but also reward them in completely unique ways.
The bank has earmarked an estimated R280 billion in existing home loan balances held by over 825,069 clients as an accessible market ready for immediate engagement.
The group has said of its mortgage product: "Imagine discounted interest rates on your home loan when you manage your money well."
Clients will be able to apply for a home loan via the Discovery Bank app, and will enjoy the full digital functionality offered by its other bank account services.
For banking clients, the financial services company offer the following:
Dynamic Interest Rates: manage your rate with good money habits. Take control of your interest rates with Dynamic Interest Rates, which are linked to your Vitality Money status. By improving this status, you can enjoy up to 7.35% interest on savings and lower borrowing rates by up to 7%.
Moneyweb has provided additional insights into its upcoming home loan offering, outlining how it plans to offer interest rate discounts of up to 1% to clients.
These discounts, however, are not yet public as the product has not been officially launched.
The home loan interest rates will be based on the three-month Jibar (Johannesburg Interbank Rate), in contrast to the prime interest rate used by major banks.
This approach has both advantages and disadvantages, particularly in fluctuating interest rate environments.
Clients will receive a contracted interest rate, which includes a "link rate" based on their risk profile added to the Jibar. To compare this to a prime lending rate, Discovery suggests subtracting 3.2% from the prime rate.
Additionally, clients can receive up to a 1% discount on their base rate, determined by various factors including their Discovery Bank product type, Vitality Money status, and insurance coverage. An engaged
Vitality Money client on Diamond status could potentially receive the full 1% discount.
According to Discovery, 60% of its existing bank clients are expected to benefit from interest rate reductions on their home loans.
The official website mentions potential savings of up to 1%, but in its results presentation, Discovery hints at even greater savings opportunities.
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