With a growing middle class in Rwanda, affordable housing is one of the big challenges. KCB Rwanda is on the frontline of tackling this issue, with its mortgage loan launched in 2011. Hope Magazine talked to Beatrice Chege, Head of mortgage financing at KCB Rwanda, to learn more about KCB’s efforts in helping Rwandans to own their own home.
How has the mortgage product performed ever since the launch in 2011. How many housing units have you financed so far?
The mortgage product has been a success since its launch, as the product was designed specifically to address the barriers to home ownership. So far we have financed over 1,000 home owners. One of the first beneficial features of the KCB mortgage was a low deposit requirement of only 10%.
This together with an extended term of up to 20 years has seen a good up take of the product. We made a disruption in this space which has had a positive impact on the lives of people.
In 2012, we again realized that the deposit requirement of 10% is still a hindrance and we removed totally the deposit requirement. KCB Rwanda became the first Bank in the region to introduce 100% mortgage financing even for residential construction loans. It is important to note that this financing is still within the minimum lending criteria where the loan amount is subject to the repayment ability of the customer and the property values are not for high end property.
Does KCB Rwanda finance property developers to build estates?
Yes. Increasing affordable housing is one of the key growth pillars for the government. We desire to contribute significantly in this sector and we are financing developers and especially those who are targeting the middle and low income earners.
One of such properties we have financed is the Kigali Village Suites in Rebero, a modern and unique apartment project. This project is attractive in that it seeks to address the issue of acceptability of apartment living by trying to incorporate market preferences and address the perceived un-attractive features of apartments. The apartments are now selling and mortgage finance is available for the interested buyers.
How much has the bank invested in the product and how much to plan to invest in the next 5 to 10 years?
The investment so far on mortgage is over Rwf 30 billion. The mortgage growth on average is 30% year on year.
What is the number of house units you want to finance in next one to five years?
We would wish to finance over 300 home owners every year.
What is the current interest rate for a mortgage loan from KCB Bank Rwanda?
The interest rates vary from 13.5% up to 17%. Pricing is based on a number of factors including the risk profile.
What types of mortgage products do you have so far, and what is the cost and period of payment.
We offer mortgage loans to purchase fully completed houses to customers, loans to construct own homes, loans to purchase plots and also equity from individuals who already fully own residential property. They could have taken a mortgage previously and have fully repaid it and need to release equity from the homes for other projects. There is no particular range to a mortgage. We finance mortgage loans based on the ability of the borrower to repay and comfortably service the monthly repayment.
Read this article and more in issue n° 78 of Hope Magazine.