Kiyapili Sibanda, Business Reporter
Building societies have slashed lending rates to 12 percent in compliance with the Reserve Bank of Zimbabwe (RBZ) guidelines to offer low cost housing finance.
The Association of Housing Financiers in Zimbabwe chairman, Mr Felix Gwandekwande, said yesterday that most institutions have since cut lending rates and the move should see more individuals and housing developers accessing mortage finance.
“The lending rates have been slashed in the past few weeks and we are really happy about the new development that should unlock the growth potential in the housing development sector,” said Mr Gwandekwande.
He said the central bank realised that most house seekers could not afford the mortgage finance hence the directive to reduce lending rates.
Since adoption of the multiple currency system in 2009, many banks were charging exorbitant interest rates of up to 40 percent.
Many clients therefore found it difficult to pay back loans resulting in the ballooning of non-performing loans that chocked banking viability until the central bank intervened through Zimbabwe Asset Management Company (Zamco), which absorbed bad loans.
Mr Gwandekwande said following the slashing of the lending rates, the loans are now affordable to the majority of home seekers.
Mr Gwandekwande said they were looking for external investors to inject funding to match anticipated demand for low cost housing loans.
“The building societies are courting external investors over the possibilities of fresh funding to sustain the ever-rising demand for low cost housing loans,” he said.
Estimates indicate housing requirements for the country stand at 1.25 million housing units. Earlier this year, the RBZ capped interest rates at 12 percent per annum from 18 percent and further reduced bank charges in a bold move meant to enhance financial sector stability and stimulate production across all sectors of the economy.