Wednesday, May 25, 2022
  • About Us
  • ImagiNATION
  • Adverts
  • Rate Card
  • Contact Us
The Nation Online
Advertisement
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Columns
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Columns
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
No Result
View All Result
Home Business Business News

Banks speak on mortgage gaps

by Grace Phiri
17/04/2021
in Business News, Editors Pick
3 min read
0
Share on FacebookShare on TwitterShare on WhatsAppShare on LinkedinLinkedinShare via Email

Bankers Association of Malawi (BAM) has justified why almost half of Malawian banks shy away from mortgage financing, saying different banks offer different services to their niche.

BAM chief executive officer Lyness Nkungula’s reaction follows revelations from the Center for Affordable Housing Finance in Africa (Cahf) that only four of Malawi’s nine commercial banks provide mortgages, which are offered based on client’s income at an average interest cost of 19.5 percent.

Almost half of Malawian banks shy away from mortgage financing

This is, however, despite the economy having the demand for housing at 21 000 units annually with only 10 percent of the houses being built.

In a written response to Business News on Wednesday, Nkungula observed that not all banks offer mortgages as their service portfolio.

She said: “Banks offer services to different markets. You may be aware that NBS Bank plc emerged from New Building Socety whose sole core business at that time was to offer housing mortgage.  Likewise, FDH Bank plc and CDH Investment Bank came out of discount houses whose purpose was the provision of discounting financial instruments.

“Therefore, not all banks offer mortgages as their service portfolio. They usually focus on their market niche.”

Cahf figures indicate that our counterparts Zambia, Tanzania and Mozambique have 10 banks, 34 banks and 19 banks, respectively.

Their mortgage interest rates averages 24.5 percent, 17 percent and 16.23 percent for Zambia, Tanzania and Mozambique, respectively.

On Malawi, about 70 percent of the urban population live in slums, located in the outskirts of major cities with average rentals of approximately K75 000 and a minimum wage of K35 000 while a decent house costs an average price of K10 million to own.

The financial sector’s mortgage policy for the country demands that in mortgage approval, the applicant’s monthly repayment should not exceed 35 percent of his/her monthly salary.

With the current average mortgage rate of 19.5 percent this means the client is expected to repay about K232 166 ($315) a month from a minimum income of K663 333 ($900) for a K12 million ($16 284) mortgage while the average salary for most mortgage applicants is about K400 000 ($543).

On the other hand, the minimum mortgage offered by the commercial banks range between K12 million ($16 284) and K16 million ($21 712).

Meanwhile, the urban population is on the rise.

According to Ministry of Local Government, the population of the country’s major cities was 3 304 531 in June 2019 and it is projected to reach 4 254 811 by 2023.

This means that the population of major cities will have increased by 18.3 percent by 2025.

Consumer rights activist John Kapito observed that the housing market cannot be left to market forces to determine when incomes and wages are regulated by government.

In a separate interview, Land Economy Board registrar Mickson Chiundira observed that access to land and limited financial access has made it even worse for low income earners to own or afford decent housing. n

Previous Post

Throwing the ultra poor into cruel darkness

Next Post

Covid-19 cash beneficiaries form savings groups

Related Posts

Business News

Weak tobacco exports worsen trade balance

May 25, 2022
Business News

Tobacco loans under threat

May 25, 2022
Business News

Nyasa Mobile Limited partners Vodafone

May 25, 2022
Next Post
42.1 percent of the households borrow from village banks

Covid-19 cash beneficiaries form savings groups

Opinions and Columns

People’s Tribunal

What was that press briefing all about?

May 22, 2022
Big Man Wamkulu

Wife, in-law plotting my downfall

May 22, 2022
My Thought

Tonse Alliance died on arrival

May 22, 2022
Layman's Reflection

New IMF programme pivotal moment for Tonse Alliance

May 21, 2022

Trending Stories

  • Kalindo: I am hearing it from you

    Kalindo earmarked for diplomatic post

    0 shares
    Share 0 Tweet 0
  • Musician Martse in hospital after fire accident

    0 shares
    Share 0 Tweet 0
  • Musicians, fans mourn Martse

    0 shares
    Share 0 Tweet 0
  • APM under pressure

    0 shares
    Share 0 Tweet 0
  • Cooking oil project impresses Chilima

    0 shares
    Share 0 Tweet 0

Malawi-Music.com Top10

  • Values
  • Our Philosophy
  • Editorial policy
  • Advertising Policy
  • Code of Conduct
  • Plagiarism disclaimer
  • Disclaimer
  • Privacy Policy
  • Terms of use

© 2022 Nation Publications Limited. All Rights Reserved.

No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Columns
  • Sports
  • Chichewa
  • Enation

© 2020 Nation Publications Limited. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.