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ZBS hikes mortgage rates

Ngoni Chanakira

THE Zimbabwe Building Society (ZBS) has hiked its mortgage rates in line with the country’s commercial banking sector, which has also increased Minimum Lending Rates (MLR).

Analysts say this is the result of the country’s hyperinflationary environment that has witnessed everything going up almost on a weekly basis.

The country’s inflation currently stands at 525,8%, up from 455,6% in September.

The ZBS, in which the Reserve Bank of Zimbabwe (RBZ) acquired a large stake in November 1998 – prior to the adoption of The Troubled and Insolvent Bank Policy – to protect depositors and maintain stability in the banking system, is now undergoing privatisation and the process is expected to be completed soon.

Last month the Central Africa Building Society (Cabs) increased its rates for potential house-owners.

ZBS, led by Ben Chikwanha, yesterday said it would be increasing its rates with effect from December 1.

A wave of increases in the MLR seems to be the order of day with several banks increasing theirs almost on a monthly basis.

Banks have increased their MLRs with some charging as much as 170%.

Trust Bank Ltd is charging 163% while First Bank is charging 169%.

ZBS said non-owner occupied properties would have their rates increased to 85%, while low and high density owner-occupied properties would charge 55%.

Individuals with access to the United States Agency for International Development (USAid) loans would now have to pay 30% interest on their loans.

Industrial, commercial, vacant land and consumer loans would now repay their loans at 90%.

Religious and charitable organisations, tourist development and sports clubs will now have to fork out 90% in interest.

The increase in mortgage rates means Zimbabweans will now have to dig much deeper into their pockets for accommodation needs.

Intermarket Building Society and Beverley Building Society are understood to be working on new lending rates as well.

The RBZ says total building society assets last year amounted to $108,6 billion as at December 31 representing a market share of 12,7%, which figure remained stable when compared to the December 2001 figure of 12,4%.

The average capital adequacy ratio stood at 66% with components of Tier 1 at 53,6% and equity to assets at 24,8%.

Analysts say in response to the money market rates, which remained depressed last year, building societies were forced to concentrate on their core business of mortgage lending.

“As a consequence, profitability ratios, namely the return on assets, return on equity, and net interest margin, went down from 5,1% to 2,5%, 17,1% to 10% and 11,6% to 6,5%, respectively between 2001 and 2002,” the RBZ said in a report.

The First National Building Society, another institution, was placed under curatorship following excessive liquidity problems emanating from mismatches of asset and liabilities and misappropriation of deposits towards the purchase of personal properties by senior executives.

The scam exposed building societies in Zimbabwe.

The RBZ said indications were that the asset identification process by the curator could result in a substantial amount of the deposits being liquidated.

The country’s financial sector, including the building societies, have been accused of profiteering at a time when other sectors are facing problems.

Most banks have released billion-dollar profits in their end-of-year results.

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