A few weeks after its property peer introduced a special product designed for the youth, the National Development Bank (NDB) this week entered the fray with a cheaper solution for property development.

The new product, the Bonno NDB Construction Loan, is a self-fulfilment of what the government-owned development finance lender promised it would add as development elements when it introduced Bonno NDB Home Loans last year.

"In 2007, the bank introduced Bonno NDB Home Loans to cater for home improvement, buying a plot and home purchase," NDB says in a written response to Mmegi. "As part of the bank's re-engineering and enhancement of products, the construction phase is now being rolled out.

"This move will ensure that the bank provides a complete package or a one-stop shop for property development for all Batswana."

The NDB also says the product follows its realisation that property development and purchasing has become a viable and booming business in the 21st Century, hence the bank's introduction of low-interest rates and stress-free, competitive and convenient loans.

The interest charged on the loans that range from P20, 000 to P1.5 million for individuals and companies will be Prime -2 (Prime Minus 2). The prime rate is currently 16.00 percent.

To qualify, those seeking Bonno NDB Construction Loans, should have a minimum take-home (after all fixed deductions) amount of as little as P600 for industrial class workers, P1,300 for single individuals and P1,500 for married people.

Unlike other banks, NDB has waived up-front contributions or deposits to ensure the loan is affordable for everyone who meets the minimum requirements stated.

The property constructed or purchased will secure the loan to the value equivalent to 100 percent of its open market value. In addition, the bank provides financing cover for transfer and bond fees and Value Added Tax (VAT). NDB has of late come under scrutiny for venturing into home loans and diverting away from its original mandate of providing financing for large-scale property development, tourism and funding for cattle farming.

But the bank says it is empowered by the National Development Bank Act of 1963, which also allows it to undertake project financing in property and education development. Meanwhile, when it introduced its tailor-made product for young people recently, the Botswana Building Society (BBS) said the main objective was to encourage young Batswana, aged below 31, to own houses instead of (buying) cars.

Pinagare, as the BBS mortgage is called, attracts a 14.5 percent variable interest rate, which is 2.5 percent below the prime-lending rate.

The Bank of Botswana (BoB), which regulates the industry, said the BBS product was unlikely to result in a crisis as in the US following the collapse of mortgage-backed securities.

"There is a big difference with the US. In the US, people were enticed although they were not eligible for credit," said BoB Deputy Governor Andrew Motshidisi.