‘We can now go for long-date mortgages’

Dr Blessing Mudavanhu

HARARE – Zimbabwe’s biggest lender, CBZ Holdings, says prevailing macro-economic stability will allow the bank to long-date mortgage offerings.

Over the past decade, most banks in the country have cut short the length of mortgages due to concerns over an emergence of inflationary pressures, with Zimbabwe’s annual inflation peaking at 837,5 percent last July.

But Government has since implemented a number of measures, including the introduction of the central bank’s foreign currency auction system, that have brought about macro-economic stability.

CBZ chief executive Blessing Mudavanhu told Business Weekly that current macro-economic stability will enhance the bank’s intermediary role.

“I expect that this stability will continue going forward and is really a catalyst of some activities that we are beginning to see now.

“One of the areas that we are going to be focusing on is infrastructure.

“This stability should allow for resources to go in critical areas such as infrastructure,” he said.

“With regards to mortgages, in most countries these tend to be around 20 to 30 years.

“It makes it very difficult to take a mortgage if you don’t have that relief of maturity, so that’s the positive thing about this stability.

“Part of the reason why local banks have been focusing on short-dated exposures is because of inflation.

“So this stability is leading into a more controlled inflationary regime and therefore you are going to see us extending our loans.

“Now that we can lend in US dollars, we think our dollar exposure should be long-dated.

“There is no reason why we can’t give a 30-year mortgage in US dollars, for example, because the interest rate in dollars tends to be low and it’s also a currency that you can also hedge.”

Zimbabwe’s annual inflation slowed to 161,91 percent in May from 194,07 percent in April, according to latest data from the Zimbabwe National Statistics Agency (ZimStat).

The downward trend is in line with targets by the authorities to end the year with an annual inflation rate of under 55 percent.

CBZ chairman Marc Holtzman commended Government’s efforts to ensure macro-economic stability.

“It should be observed that the current stability has been attained under a challenging pandemic period.

“A number of positive and forward-looking initiatives have already been put into motion and these include ongoing efforts to rebuild international relations and economic diplomacy, the pursuance of monetary and fiscal restraint, among others,” he said.

“Going forward, the authorities are encouraged to continue striving towards global best practices such as building sizeable foreign currency reserves, for example, traditionally equivalent to three months import cover, maintaining the budget deficit within the benchmark level of 3 percent of gross domestic product (GDP), as well as further reducing the inflation rates.” – Business Weekly

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