Housing Bank to finance mortgage lenders

Rwanda Housing Bank (BHR) is to start financing commercial banks engaged in mortgage funding in a move to expand mortgage lending in the country, according to plans by the National Bank. When transformed, the Housing Bank which currently acts as a primary mortgage lender will turn into mortgage liquidity facility. François Kanimba, Governor National Bank of Rwanda (BNR) said that there is always a mismatch between the liabilities and assets of commercial banks. He said this limits investment in long term projects, since commercial banks largely depend on customer deposits for their investments. He said that a feasibility study has already been carried out, and that discussions are underway to transform this bank into a mortgage liquidity facility to refinance primarily mortgage lenders’ (mainly commercial banks) operations. A Memorandum of Understanding (MoU) has been signed with International Finance Corporation (IFC), which expressed interest to support the reform, while the Social Security Fund of Rwanda (SSFR) is also expected to be part of the fund providers. It is hoped that the mortgage liquidity facility will help address the housing shortage in the country by providing affordable mortgage rates through provision of cheap financing to commercial banks and other real estate developers. Currently it is only the Commercial Bank of Rwanda (BCR) and Housing Bank providing mortgage lending in the country. Vivian Kayitesi, the BCR’s Marketing Manager welcomed the funding saying it will trigger health competition. She however said BCR will continue raising money to fund its mortgage scheme. “We will continue with our plans because we have issued a bond to finance our mortgage portfolio which is performing well” she said. The housing costs are said to be contributing more than 15 per cent to the country’s inflation, currently estimated at 20 percent. The financing could pave way for more banks in the country to introduce the mortgage portfolio, increasing competition in the housing sector. Ends

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Housing Bank to finance mortgage lenders