Discovery Bank’s new home loans could save South Africans R12 billion a year

Discovery Bank has launched its new home loan product, offering clients personalised interest rates using its shared-value banking model – reducing their interest rates by up to 1%. 

To achieve this reduction in the interest rate, clients will have to manage their money well with Vitality Money and protect their home loan and home with the relevant insurance products Discovery offers.

Clients can lock in a market-related rate upfront and dynamically reduce interest repayments by managing their money well to save over the long term. 

In addition to financing for new home purchases, Discovery Bank clients can also switch their existing home loans, or refinance their homes with this new offer.

Through this shared-value approach, the current Discovery Bank client base could save up to R2.8 billion in interest repayments on their current loans and with the same model, South Africans could save up to R12.2 billion a year.

“This is a highly anticipated milestone for us as we open the virtual doors to our home loans ecosystem,” CEO of Discovery Bank Hylton Kallner said. 

“The unique nature of home loans means client and asset risk typically reduce over time. With high costs negatively impacting repricing or switching to a different bank, an estimated 60% of our clients are overpaying on their existing home loans today,” he explained. 

Discovery Bank’s shared-value approach is based upon a win-win system whereby clients manage their money well, creating less risk for the bank. 

This enables the bank to offer their clients benefits, such as reduced interest rates, based on their personal data and money management. 

The behaviours that are rewarded include saving, being adequately insured, investing for retirement, and paying off home loans faster. 

Discovery Bank shares the value from these financial behaviours back with clients in the form of better interest rates and other rewards linked to the Vitality Money programme. 

The better clients manage their money, the higher their Vitality Money status and the better their rewards. 

With the new Discovery Bank Home Partner Network, clients will also get up to 30% back in Điscovery Miles on Discovery Bank purchases at select partner stores. 

The Discovery Bank Home Loan offering is administered by a dedicated team from SA Home Loans, which is 50% owned by Standard Bank.