By Farai Mabeza
THE country has witnessed a surge in mortgage financing in recent years, largely due to an increase in demand for housing and the expansion by commercial bank into areas previously reserve for building societies.
Economist, Kipson Gundani, said mortgage finance providers were increasingly tailoring their products to suit the needs of different people, particularly those previously excluded by the financial system.
“There has been a modernisation and an upgrading of the mortgage system to capture a market that has been excluded such as civil servants and those in the informal sector,” Gundani said.
He noted that the bulk of the country’s population were in the low income earning category, making it necessary for financial institutions to tailor their products for that segment of the market.
Gundani said an increase in the deposit base from about US$2 billion in 2009 to US$6 billion at the end of last year had helped banks increase their lending capacity.
“So naturally you would expect lending to increase as the deposit base increases,” Gundani said.
CBZ Bank, whose business integrated that of the disbanded Beverly Building Society, is rapidly expanding its mortgage financial services across the country. Its housing developments are mainly in high density areas where there is greater demand, an official said.
“We have housing developments in Mutare, Victoria Falls, Gweru and Kwekwe and the uptake has been very positive and good for both the stands and the completed houses in Gweru,” CBZ’s group executive for marketing and corporate affairs, Laura Gwatiringa, said.
The bank’s stands in Mutare and Victoria Falls have been oversubscribed. Stands are still available for both the Mbizo and Mtausi Park projects in Kwekwe and Gweru respectively.
In Nehosho, Gweru, CBZ is selling stands and houses.
“In order to make the project more attractive, CBZ is in the process of carrying out electrical reticulation for its Nehosho project and it is expected that the process will be completed by end of June 2017,” Gwatiringa said.
CBZ also provides building finance where it sells stands in addition to the loans for purchasing the stands, allowing clients to build houses of their own designs at their own pace.
“In order to financially include those who would not normally qualify under the traditional mortgage criteria, CBZ looks at the clients’ needs vis-a-vis their income and offers them appropriate mortgage facilities. CBZ continues to engage other local authorities for more land to develop and the market will be advised of these developments in due course,” Gwatiringa said.
Barclays Bank of Zimbabwe, now subject of a takeover after major shareholder, Barclays Plc agreed to dispose its shareholder to FMB of Malawi in May, introduced mortgage financing in April last year. The bank’s mortgage product currently offers two options for eligible customers. The first is a straight mortgage for the initial purchase of a property.
The second is equity release/secured lending offering customers who wish to borrow against an existing property to realise equity. This product is available at a maximum tenor of 20 years.
“In the future, we look forward to incorporating additional options under the mortgage financing product,” Barclays said.
Other commercial banks now offering mortgage facilities include MBCA Bank, which is offering home loans to finance acquisition or development of residential properties.
This could be an established residential property (freehold or sectional title) or a vacant piece of land, says MBCA, which says customers can even buy a holiday home or cottage.
Stanbic Bank Zimbabwe has a mortgage facility introduced two years ago for home loans repayable over a 20-year period.
The mortgage facility allows for outright purchase, which enables one to purchase a completed property; and property improvements, which allows one to renovate and improve an existing property.
GetBucks Zimbabwe, which formerly operated only as a microfinance lending institution but was licenced by the Reserve Bank to operate as a deposit taking microfinance institution in 2015, last year introduced a mortgage finance facility of its own.
Getbucks is also focusing on low income earners offering loans with a tenor of at least 10 years at 18 percent interest.
“We have seen a lot of interest from all sectors across the economy especially civil servants because most of them cannot raise the deposits so they are finding this quite attractive,” Getbucks managing director, Mercy Murevesi, said.
Getbucks’ loan clients are 70 percent public service and 30 percent small to medium enterprises.
Gwatiringa said that there were many opportunities for banks in mortgage finance and this had been evidenced by the number of new players in the mortgage finance market.
“The opportunities are in the provision of houses for the estimated 1,5 million housing waiting list backlog, provision of stands to first time home seekers and provision of building finance and home improvement loans,” she said.
Zimbabwe is urbanising very rapidly and about 40 percent of the population is already urbanised, which increases the demand for housing.