It is increasingly difficult for South Africans to get small mortgages and therefore own low-cost homes, despite several government initiatives. That is damaging low-income consumers’ financial health and frustrating access to housing in urban areas. We need new ideas on how to fix the problem. I want to propose one.

But first, consider the scale of the issue. Today, 66% of South Africans are urban, up from 62% in 2009. In Johannesburg alone, 3,000 new residents are thought to enter the city per month. The demand for mortgage finance should, therefore, be higher than ever. But in the last quarter of 2018, just R1.4bn was lent in mortgages of R350,000 or less, only 3.4% of all mortgage lending. Ten years ago, 16% of all mortgage finance went to that segment and R4.4bn was distributed...

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