POSB ventures into mortgage financing

THE People’s Own Savings Bank (POSB) is set to venture into mortgage financing after securing a licence from the Reserve Bank of Zimbabwe, the financial institution has said.

As the market becomes more constrained, the need to provide housing at an affordable cost has also risen.

Mortgaging has become popular among banks as another source of revenue and an income generator.

These banks include CBZ Bank, CABS, FBC, ZB Bank, and in recent memory, Stanbic Bank.

“The bank obtained a licence from the Reserve Bank of Zimbabwe to offer mortgage financing to its customers. The bank will soon be participating in the property market through offering mortgage loans and property development,” POSB said, adding details of the facility would be released in due course.

Mortgages act as a way to offer loans to the market after paying deposits and the balance of that being paid over stipulated time, while paying interest rates to the banks at an average of 8% to 16%.

Average requirements for deposits to be paid are 40% of the asking price.

The rise in the number of banks providing mortgages is due to the current economic constraints, namely meagre salaries, liquidity constraints, lack of lending from banks due to uncertain returns and high unemployment rate that have left little to non-disposable income for individuals.

In the 2016 National Budget, Finance minister Patrick Chinamasa projected a 4,2% growth in housing next year.

Apart from introducing financial products for the informal sector, banks have also turned to mortgages to increase deposits with POSB being the latest to enter the fray.

In the financial year ended December 31 2015, POSB’s profit for the year jumped to

$7,91 million from $1,25 million in the previous year.

During the year under review, POSB received a capital injection of $12,28 million in the form of Treasury Bills with a maturity value of $20 million, which enhanced the bank’s capital standing to $33 million.

Total assets grew to by 28% to $134 million from a previous of $105 million in 2014.

Source: Newsday