The National Land Centre (NLC) will work with banks and other financial institutions to boost the country’s Mortgage industry. This was revealed Tuesday, during a stakeholders meeting that aimed to develop the country’s mortgage strategy to ensure that more Rwandans get access to individual loans on mortgage.
The one day workshop also aimed at developing mortgage procedures that are simple, quick, cost efficient and responsive to customer requirements.
It emerged that the mortgage industry in Rwanda is under developed despite the fact that in developed countries, the mortgage industry creates an essential link to the total economy.
“In less developed countries, the mortgage credit culture is still staggering where consumers and credit institutions do not give it due regard despite its importance in the economy,” said Pothin Muvara, the Deputy Director of the National Land Centre.
He added that based on demographic and urbanization trends, housing needs are enormous in Rwanda. It is estimated that 25,000 new houses should be built annually in urban areas.
“In Rwanda owning a house is the most important investment for an individual. However it is costly since a house is worth several times his annual income which requires a credit,” he continued.
Current trends show that Rwanda has a young and rapidly urbanizing population which stimulates the demand for urban housing.
A research conducted by the National Bank of Rwanda last year indicated that the average price of an urban house was Rwf 20 million, a volume that shoots the financing need of up to Rwf 500 billion annually.
A great number of estates were developed by real estate developers that included the Social Security Fund of Rwanda (CSR), the Housing Bank (BHR) and private property developers (Tri-Star Investment, TRA Estate, GOBOKA, URWEGO, GM Engineering). However, the real estate market remains nevertheless insufficiently served.
The meeting recommended that a Public Private Partnership fund be established in the Central Bank to support the Mortgage Industry.
The fund would have 500 Rwf Billion (About $1bn) in BNR with an average annual interest of 15 percent, if set up it would generate an interest of about $150 Million annually.
The meeting brought together representatives from MINICOM, the Private Sector and all Banks operating in the country as well representatives from other stakeholders in the construction industry.