Discovery Bank launches new home loans – with a way to cut up to 1% off interest rates

 ·27 May 2024

Discovery Bank has launched a new home loan product, which the group says will give clients a way to cut their interest rates by up to 1%.

The bank said the new product will offer personalised interest rates on home loans based on clients’ risk profiles.

However, through its “behavioural banking” model, clients will then be able to decrease this rate by up to 1%.

As with Discovery’s other rewards and ‘behavioural’ modelling, this will be done by engaging with the group’s other products and services—such as managing their money through Vitality Money and getting relevant insurance products from Discovery—and adopting financially-sound habits.

“This is a highly anticipated milestone for us as we open the virtual doors to our home loans ecosystem [so] those looking to buy a new home or wanting to upgrade their home can enjoy a full ecosystem of benefits and tailor-made services in the Discovery Bank app,” said Hylton Kallner, CEO of Discovery Bank.

Home Loans meets Shared-value Banking

The bank said that as its clients manage their money well, they create less risk and more value for Discovery Bank.

The behaviours that are rewarded include

  • Saving
  • Being adequately insured
  • Investing for retirement
  • Paying off home loans faster

“The better clients manage their money, the higher their Vitality Money status and the better their rewards, [and] through the combination of Vitality Money, the Home Loan Protector and Building and Contents Cover, Discovery Bank home loan clients with can lower their interest rates by up to 1%,” added the Bank.

All clients who take out new home loans, switch home loans or refinance their homes with Discovery Bank can also qualify for the Shared-value Interest Rate discount.

Discovery Bank provides home loans up to 100% property value with personalised rates and terms up to 30 years. Clients can transfer existing loans or refinance to unlock home equity in cash.

Home purchases are a major debt source for South Africans but also offer significant asset value and inflation protection.

“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, the result is that an estimated 60% of our clients are overpaying on their existing home loans today,” said Kallner.

“The (product) is not only a once-off credit reassessment but a client-controlled dynamic interest rate that adjusts based on real-time changes in financial behaviour, offering an accurate risk-based interest,” he added.

Read: Discovery Bank issues fraud alert – scams to look out for in South Africa right now

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