Housing shortage: BCR ventures to mortgages

Rwanda Commercial Bank (BCR) says it is to inject Frw3 billion to finance mortgages, a move that may address the shortage of standard housing units in the country.
BCR'S David Kuwana.
BCR'S David Kuwana.

Rwanda Commercial Bank (BCR) says it is to inject Frw3 billion to finance mortgages, a move that may address the shortage of standard housing units in the country.

The bank has come with two products; one for ordinary Rwandans in Rwanda, and another for the Diaspora. The mortgages product starts next year.

“We are already in discussion with the diaspora group to offer this product to those who want. The response has been very positive. And we have already started opening accounts,” David Kuwana, the managing director BCR said.

BCR’s investment in housing comes at backdrop research figures indicate that only 20 per cent of the houses in the country are planned. Meaning 80 percent of the structures could be categorised illegal.

“This (poor housing) is not a desirable state. As much as possible, people should live in houses that are formally structured, formally built, safe, secured and in a planned manner.”

With the mortgage product, individuals can borrow money from BCR for constructing, buying or extending a house. The house is the security for obtaining the money from the bank.

If the project kicks-off, then hundreds of modern housing units valued at between Frw20 million-40 million will be built. The houses will be paid for over 15 years. Other banks in the country are issuing home construction loans where customers service the loan in seven years.

“There is a huge demand for houses in this market and you can’t be a bank in this environment and miss a point that there is a big demand for housing,” Kuwana said.

The bank announced that they will raise funds to finance the mortgages through dealing in bonds on the planned Capital Markets, partly because long term funding is not available on the Rwandan market.

“We are working with capital markets people to have a bound put on our capital market counter next month. This will raise funds to enable us finance the project,” said Kuwana.

He asked Rwandans to get interested in mortgages saying the asset one is buying accumulates value as one lives-in-it. Citing Kaculiro, Kuwanda said, “So the guys who bought houses in Kaculiro paid 28 million. It probably cost them Frw20-25 million to build. But right now those houses are worth Frw60 million and above.”
 

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