Zimbabwe: POSB $5m Mortgage Fund Targets Low-Income Earners

Aug 28, 2017 | Financial Gazette; All Africa

The People's Own Savings Bank (POSB) has unveiled a $5 million mortgage loan facility for low-income earners.

Non-traditional mortgage lenders have increasingly diversified into the segment after active encouragement by both Finance Minister Patrick Chinamasa and Reserve Bank of Zimbabwe governor John Mangudya. In his 2014 budget, Chinamasa announced tax incentives for mortgage lending, which were followed by the central bank's invitation for banks to offer mortgage banking products. POSB obtained a mortgage lending licence in August 2015. POSB chief executive, Admore Kandlela told The Financial Gazette yesterday at the launch of its mortgage facility in Harare that the State-owned financial institution was working on various measures to encourage high uptake. Several housing projects targeted at the low-income segment have seen low levels of subscription, largely due to expensive pricing. "We raised about $5 million earmarked for mortgage loans from the time we got a license from the central bank, but we have only given out $1,5 million," he said, adding that the bank is now on the market seeking for lowly-priced land for development as a way of lowering interests rates. "We have been offered land banks by the government in various areas across the country and it's only a matter of time before we start developing. We are also partnering with entities such as corporates who are willing to pay a deposit for their employees and we use that as a backup," Kandlela said. Across the world, unlocking land supply has been identified as one of the best ways to reduce housing costs. Experts assert that since land is usually the largest real-estate expense, securing it at appropriate locations can be the most effective way to reduce costs. The bank's mortgages and property development manager, Austin Ratsauka said mortgage tenure was up to 15 years with an interest rate of between 10 and 12 percent per annum. "Research has shown that most Zimbabweans prefer to own houses as opposed to renting and our aim is to provide housing to high and low-income earners, corporates, self-employed and those in the diaspora," he said. Ratsauka further indicated that there is a correlation between the provision of decent accommodation and economic growth. "Decent, affordable housing is fundamental to the health and well-being of people and to the smooth functioning of economies. Yet around the world, in developing and advanced economies alike, cities are struggling to meet that need due to high interest rates. Read more on All Africa. Source: All Africa