Demand for mortgage finance increases

ZIMBABWE is expected to register an increase in the number of mortgage lending applications for the year 2013 after the country surpassed the figure that it recorded for the whole year in the first 10 months of this year.

Addressing delegates who attended a Real Estate Institute of Zimbabwe seminar on property investment which focused on mortgage lending, CABS general manager responsible for retail banking Ken Chitando yesterday said 1 512 applications totalling $60,7 million were made in 2012 for mortgage lending.

"As of October this year a total of $65 million has been recorded for 1 127 mortgage loan applications in the country. The 2013 numbers are expected to be much higher than last year," Chitando said.

He said the mortgaging sector in the country was operating in challenging times with lack of long-term mortgage finance and limited housing stock as the country had close to 1,5 million housing backlog.

Chitando said 500 000 of the backlog was in Harare.

"People are selling existing houses. The houses are just changing hands and property prices are still high relative to regional comparisons," he said.

Chitando said CABS was working on two housing projects in Budiriro and the ZRP Hatcliffe Scheme.

He said a total of 1 593 stands were due to be completed under phase one of the Budiriro project and works had already begun onsite.

Under phase two, a total of 1 509 stands will be completed and tenders were being evaluated.

Chitando said Zimbabwe's largest mortgage financier, CABS, is working towards the construction of 973 units and the project should commence next year.

Speaking at the same workshop, CBZ Bank Limited senior manager in charge of commercial and employer-assisted schemes Mncedisi Nyathi said shortage of finance and land were the major problems in housing market.

"High-density areas are in private hands and they are expensive. We will continue to assist in terms of addressing the housing backlog if we get the land as a bank," Nyathi said.

Nyathi said banks like CABS were offering mortgages with a 10-year tenure. He said the tenure had improved since 2009 where the mortgage tenure was two years.

A representative from ZB Building society William Mukarwi said the mortgage sector was facing liquidity challenges and sanctions also affected the bank.

He, however, said the bank was trying in its own way to finance mortgages.

"New housing stock is still limited and our mortgage period is still three years," he said.

ZB has stands in Springvale that they are currently selling at between $11 385-$22 000 for 300-600 square metres.

In its recently released Africa Report for 2013, international property firm Knight Frank said the absence of long-term mortgage had restricted residential market activity.

"Some financial institutions have been able to secure external lines of credit to support mortgages for private purchases, but the secured loans have been for relatively small amounts over short periods, eg 10 years at rates of 15-18% per annum," thus making them expensive for borrowers, the report reads in part.

Last year, government announced plans to re-introduce paid-up permanent shares (PUPS) as Treasury sought to stimulate mortgage financing.

Presenting the 2013 National Budget, then Finance minister Tendai Biti said the PUPS would enable building societies to raise long-term funding for periods of up to two years.

PUPS are designed to mobilise private sector funds for housing by enhancing building societies' competitiveness in attracting deposits.

The conditions were that at the end of each financial year, each building society had to make up a quarter (25%) of the mobilised funds available for low-income housing.