CABS to lend $100 million for mortgage financing

Published: 05 March 2014

CABS says it will lend $100 million in mortgaging financing this year and has doubled the repayment period in a boost for the property sector.

Responding to questions from NewsDay, CABS managing director Kevin Terry said the bank recently increased the tenure of the mortgage financing to 20 years from the 10 years that they have been offering since 2009, becoming the first bank to achieve such feat.

"The amount of loans that will be disbursed to customers this year will be demand and deposit-driven. We will continue to seek credit lines through deposit mobilisation and support from our shareholder. We expect to lend around $100 million this year," Terry said.

"The CABS mortgage tenure has been increased as a measure to try and ease the pressure of repayment to make our mortgage product more affordable. A reduction in the mortgage tenure will mean there will be a reduction in monthly installment."

Terry said the bank required 25% of deposits for mortgage.

Terry said non-performing loans (NPLs) were high in the market, but was slower in mortgages which "is generally considered more important by a borrower so it's given priority to other loans."

The CABS boss said 500 houses would be ready for allocation and application processes would be commencing shortly at its housing project in Budiriro.

The project was launched last year and will result in the construction of 3 102 low cost houses over a five- year period.

He said the building society will continue to look for lines of credit this year from financiers.

Banks are warming up to mortgage financing to get incentives from Treasury. In his 2014 national budget, Finance and Economic Development minister Patrick Chinamasa urged financial institutions to avail mortgages in line with the economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

"I shall be gazetting the necessary instrument to extend the tax exemption on mortgage finance to all financial institutions that are providing mortgage finance," Chinamasa said.

Zimbabwe has a housing backlog of 1,5 million people, a third of which are in Harare.

According to statistics from the real investment sector, a total of $65 million was recorded for 1 127 mortgage loan applications as of October 2013.

Most financial institutions in this country are offering loans that have tenure of 10 years although they face problems of defaults. In January this year 35 properties were auctioned by financial institutions to recover money owed.

- newsday