The Sunday News
Tinomuda Chakanyuka Sunday News Reporter—
THE National Social Security Authority through its newly-established National Building Society is targeting to deliver 10 000 low-cost housing units in the next two years as part of easing the country’s national housing backlog. The NBS, whose initial capital stands at $25 million was launched in Harare on
Wednesday last week, with a number of incentives meant to attract homeseekers, most who had been failing to acquire or build houses due to high interest rates that are being charged on mortgages.
In response to e-mailed questions to clarify how the bank will play its part in the country’s provision of housing units, NBS managing director Mr Ken Chitando said although provision of houses will be determined by demand in respective communities, the banking institution was targeting 10 000 units by 2018.
The target was set by the Government and assigned to NSSA as part of fulfilling the economic blue-print Zim Asset.
“Provision of housing will be determined by demand in the respective communities. The initial target given to NSSA by Government under Zim Asset was 10 000 units by 2018. We intend to deliver a meaningful number of units towards that target between then and now,” he said.
He said in the provision of the units, the bank, although its roots is from workers investments through NSSA, will target even those in the informal sector.
“Our packages will be a reflection of one’s ability to pay but we have capped our limits at 40 percent of one’s earnings. If someone has a regular income, that income has to be reflected in our books for at least three months and the same goes for informal workers,” he said.
At 40 percent cap, it means even low income earners can still afford to access reasonable funding for either buying or building new houses. The facility is also expected to augur well with most civil servants whose incomes range around $500 per month.
At 40 percent cap, it means someone who earns $500 can get a loan which compels his/her to pay $200 per month.
According to NBS, the repayment tenure for the housing loan can be up to 25 years, meaning a civil servant paying $200 per month can access about $60 000 which is inclusive of the interest. Most low- income houses in most cities range around $20 000 meaning, the facility can be affordable to low-income earners.
“NBS product offering is premised on affordability and this will be reflected in the interest rates and loan repayment tenure that support accessibility to financial services by previously unbanked sector of the economy,” said Mr Chitando.
He added that first time home owners will be given 25 year mortgages at 9,5 percent interests rates. He said the organisation decided to come up with the low income housing scheme as “the prevailing cost of money is expensive and has deterred borrowing.’”
Said Mr Chitando: “Our pricing model is based on high volumes and low margins and we believe that this is sustainable. We are also using a risk-based pricing model, where low risk and first time home owners will get financing at 9,5 percent. There will be cases where applicants, depending on their individual risk profile, will pay slightly higher than 9,5 percent. Our property development thrust is deliberately focusing on low cost housing with the intended beneficiary in mind hence the need to keep costs at a minimum level.”
Focus, he said, was now on increasing the bank’s foothold with a branch being opened in Bulawayo on Thursday.
“Next week we are opening another branch in Bulawayo and there after we will seek to increase our footprint country wide through Agency banking within the existing NSSA offices around the country thereby allowing our clients access to our services,” he said.
The Building society was created out of two funds under NSSA administration, the National Pension Scheme (NPS) with a 60 percent stake and the Workers Compensation Fund (WCIF) with 40 percent shareholding. NBS was registered last year.
Zimbabwe has been short of mortgage lending, with the few banks issuing mortgages charging high interest rates resulting in high defaults rates and auctioning of houses by financial institutions to recover their funds.
Zimbabwe, as at 2013, was on a 1,25 million housing backlog with the Government targeting to provide at least 300 000 housing units over the Zim Asset period (2013-18). The Government has ordered local authorities to unveil land for housing in their jurisdiction as a way of trying to deal with the backlog. According to Zim Asset, one of the main ways to meet the growing demand for accommodation is through strengthening financial institutions which provide mortgages in order for more people to access funding.
