Mortgage rates out of reach for many

Charlotte Musarurwa
Financial institutions have been faced with a high demand for housing mortgages over the past years as citizens seek to become home owners.
Most home seekers are raising concern over the increased interest rates being offered by some banks.

The expensive mortgages have even forced desperate home seekers to turn to housing co-operatives that have sprouted across the country. While mortgages are open to everyone, low-income earners could pay almost all their salaries in mortgages redemption.

Bankers Association of Zimbabwe (Baz) former president Mr George Guvamatanga said that the demand for mortgages has increased since dollarisation, with many banks offering them as compared to the previous years.

“If you compare the previous years and now, there has been a marked improvement in terms of the tenure which has lengthened. Most financial institutions are now offering 20-year mortgages and lowered interest rates.  Also taking into consideration the Zim Asset plan, there is increased demand given that Zimbabweans by nature want to be property owners.

“The advantage is that the legislation has changed because over the years only building societies were allowed to give mortgages, they are the ones who already had the expertise but now there is no restriction on which institutions can offer housing mortgages,” said Mr Guvamatanga.

He said cases of foreclosure were very few in most banks.

“My assessment is that most Zimbabweans value education, property and health. This means that incidences of foreclosure are less but that does not rule out the fact that the incidents are prevalent.”

However, according to a media survey, the mortgage requirements are beyond the reach of many. Currently, some of the banks offering houses on mortgages include FBC Building Society, Cabs Building Society, ZB building society and CBZ. FBC Building Society is currently offering Greendale and Waterfalls houses on mortgages. The Greendale cluster houses are being sold for US$200 000 with 30 percent deposit upfront which is US$60 000, the monthly submissions to the house is US$2 400 per month within a period of 10 years. The salary requirement for a client to qualify for the scheme is US$10 000 per month. Under the FBC scheme are also houses in Waterfalls which are being mortgaged for US$137 000 with a deposit of US$36 500, the salary requirement is US$5 000 within a period of ten years.

Depending on your requirements, CABS offers a number of mortgage options. The Ordinary Loan option is where an existing property is offered as security over the bond. The banks admitted that foreclosure process comes in when the customer defaults payments according to the agreed terms and conditions.

“Upon defaulting, the customer must be able to communicate to the bank so that necessary arrangements can be made. Our policy regarding those who default is that we sell or auction the house and recover our money and it is the depositor’s money. We repay the customer back his money according to agreed terms as well. But the cases are very rare so far,” said the official from FBC bank who preferred anonymity.

Another official from ZB Bank said the bank was facing liquidity challenges.

“Our bank has not been able to offer housing mortgages because of the challenges that we are facing as well as the economy which has not been performing well. Due to the financial constraints we are currently facing, we cannot offer mortgages but we have an arrangement where we are selling stands in Springvale Ruwa through the bank,” he said.

Some civil servants who constitute the bulk of home seekers, earn as little as US$300 per month and do not qualify for the mortgage bonds.

 

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