EDITORIAL COMMENT: Banks should reduce interest rates on mortgage finance


Zimbabwe is battling to clear the 1,2 million housing backlog which is largely blamed  on the unavailability of mortgage finance. The little mortgage finance available is beyond the reach of most home seekers. The challenge therefore is to make available affordable mortgage finance to enable people to either build or buy houses.

It is against this background that we want to echo the Public Service, Labour and Social Welfare Minister, Cde Prisca Mupfumira’s sentiments that banks should offer favourable mortgage financing.

Speaking at the official opening of the third National Building Society branch in Chinhoyi last week, Cde Mupfumira said banks should reduce “unjustifiable” high interest rates on mortgage finance in order to stimulate economic growth. Housing development has been adversely affected by the exorbitant cost of mortgage finance hence most towns and cities have been witnessing ballooning housing waiting lists.

Shelter is one of the basic human rights and therefore it is the wish of each and every family to at least own a house. One of the critical responsibilities of local authorities is to provide accommodation to their respective residents.

Councils and private developers have over the years worked on different housing schemes as they battled to clear the housing backlog which remains a big national challenge. Housing development unfortunately nearly ground to a halt during the past few years and this has been largely blamed on the unavailability of mortgage finance.

The little that has been available is not affordable to most home seekers so there is urgent need to review the cost of mortgage finance downwards. It is however pleasing to note that the new kid on the block, NBS seems to have taken heed of Government’s call to reduce interest rates on mortgage finance and is charging nine percent per annum compared to about 20 percent that other banks are charging.

We want more banks to be at nine percent or lower to enable more home seekers to access mortgage finance. It serves no purpose to make available finance which the intended beneficiaries cannot afford. We have said before that the Zimbabwean economy is on the recovery path as evidenced by the many positive developments in the different economic sectors.

Just recently, the housing development programme received a major boost when the Infrastructural Development Bank of Zimbabwe board approved the implementation of four construction projects in different parts of the country at a cost of $108,4 million. The projects include the servicing of residential stands in Hwange, Kariba and Harare as well as construction of student halls of residents and staff accommodation at seven universities.

The servicing of residential stands in the two towns and the capital, Harare, should give a new impetus to housing development. It is our fervent hope that more banks will come up with similar projects to boost housing development and help clear the national housing backlog.

The standard of living of a people is measured by the type of accommodation among other factors and it is therefore incumbent upon Government, councils, housing developers, banks and other financial institutions to strive to ensure people have access to decent accommodation.

We want to once again implore banks to urgently review the interest rates of mortgage finance so that it is affordable to the majority of home seekers.

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