Govt sets up $150 million housing fund to offer affordable mortgages
Tuesday June 11 2019
Eric Rutabana, chief executive officer of the Development Bank of Rwanda. PHOTO | FILE
The government plans to operationalise a $150 million housing fund that will provide housing subsidies to low-income earners weighed down by high interest mortgage rates.
Majority of first time home buyers in Kigali are unable to afford current market rates of good houses.
They are also unable to qualify for mortgages from banks due to high interest rates, among other requirements.
Officials said the new facility, run by the Development Bank of Rwanda (BRD), seeks to work with commercial banks to offer mortgages to clients in the low to moderate-income bracket at lower interest rates and longer repayment periods.
It is expected to start once construction of more than 3,000 low-cost housing units being built in Nyamirambo is completed in the next 12 months.
The projects is a joint venture between Shelter Afrique and BRD.
The project, which was inaugurated last week, will deliver one, two and three-bedroom houses at prices ranging between Rwf12 million and Rwf35 million.
“We are mainly targeting people constrained under the existing housing market due to their low wages. It was unusual to find a house in the Rwf10 million to Rw20 million range as most of those supplied by the market were in the Rwf45 million range,” said Eric Rutabana, BRD chief executive officer.
Mr Rutabana told Rwanda Today that while banks usually charge higher interest rates at between 16 and 17 per cent, the fund could enable first time home buyers to get mortgages with interest rates of as low as 11 per cent payable in 20 years and more.
Low-income
Official data shows that lower income earners who make up more than 59 per cent of the city population earn less than Rwf100,000 a month and can only afford to spend Rwf40,000 on housing per month.
The data also shows annual demand for housing in Kigali is at more than 30,000 units, but supply is at only 1,000 units largely dominated by high-income residents.
Developers blamed the persisting shortage of affordable homes to building costs such as the cost of land and construction materials.