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Mortgages future now bright

Staff Reporter 27-05-2009

Recent monetary policy pronouncements will in the short term bring back mortgage loans which were literally discontinued last year as they were worthless.

A hyper-inflationary environment always militates against mortgage loans which was the case in Zimbabwe especially in the second half of the year. However, with dollarisation, it is hoped that building societies will start issuing loans as there is likely to be new housing developments in the short term.

Last year, mortgage loans were valueless in real terms as most sellers of properties sought hard cash while building societies would only lend in the local currency as such mortgage lending made no sense yet it is supposed to be the core business of building societies.

“We are likely to see an increase in mortgage lending as the building societies would also want to capitalize on the new currency regime which in all fairness is very favourable for business. As you may be aware the banking sector is still in a process of finalizing all the requirements for the new environment and I am of the opinion that as soon as all systems are in place then we would see them giving mortgage loans,” said Mr Mike Chikunda an economist with a local financial institution.

The economist however warned that despite the positive aspects of dollarlisation, there was still a residue of the economic downturn which may affect operations of building society. He gave an example of the closure of 37 branches under the Central African Building Society – Cabs- as one such residue. This would mean that areas which had branches closed may not see rapid developments in the short term.

Zimbabwe has four major building societies namely Cabs, Intermarket, Berverly and FBC.