Cabs resumes mortgage loans

Ngoni Chanakira

THE Central Africa Building Society (Cabs) has resumed mortgage lending to customers countrywide, a senior official has said.



ans-serif”>He said the move comes at a time when there is little activity on the housing market and customers are finding it almost impossible to own properties.


“Yes we have resumed mortgage lending,” the official said in an interview.

“We have about $240 billion to lend customers for the period between July and June 2005. We will, however, change our rate depending on the market and what customers need.”


He said all were eligible to borrow money from the country’s largest building society.


“What we need is a confirmation of a salary or in the case of a self-employed individual some form of security and/or some form of financial statements.”


He said the funds could be used for building a house, buying property, refinancing, working capital or developing a property.


“The amount one can borrow depends on one’s salary,” he said. “However, we also look into the customer’s financial position and ask for statements and invoices from their business if they have one. We need to do this to evaluate risk.”


The official said while the response had been positive, it was still too early to measure exactly how many individuals had taken up the mortgage loan offer.


Cabs last year advanced by way of new mortgage loans a total of $9,7 billion, an increase of 117,3% over the previous financial year.


The building society said this was a new record in mortgage lending.

Former Cabs chairman Enos Chiura said applications from 1 083 borrowers were processed of which 234 were in respect of loans on properties in high density areas and 849 for purchase and building both low density residential and commercial properties.


“The acute shortage of affordable housing continues to be problem and the increased costs together with the shortage of building materials further reduced the delivery of new housing units, particularly in high to medium density areas where serviced stands with individual title are a scarcity,” Chiura said in his annual report for the period ended June 30.


Cabs increased mortgage rates on two occasions during the year in an attempt to offset the escalating costs of operation that it had experienced.

“However, these rates are still extremely negative to inflation and very attractive to borrowers in the market in general,” Chiura said. “Funds generated from investing activities continued to be utilised to subsidise mortgage lending rates in an attempt to keep these at affordable levels.”


He said 957 loans were advanced for the acquisition of existing residential properties while 66 loans were advanced for the erection of or improvement to existing dwellings.


“A further 60 loans were advanced for commercial and industrial purchases and development,” Chiura said.


Overall, the society’s mortgage advances grew at $14,7 billion or 45,9% of the industry total of $32 billion as at June 30.


Chiura said inflation continued to drive the value of properties upwards resulting in a significant decline in the loan to value ratio of properties mortgaged.


This, in turn, had a positive effect on loan servicing by borrowers with only 5,3% of loans being in arrears at year-end.