10 December 2012

Rwanda: BRD Launches Saving Scheme for Discounted Mortgages

Development Bank of Rwanda (BRD) has unveiled a new mortgage product aimed at encouraging customers to save while they plan to build or buy their dream homes. The facility is officially being launched during the Prosperity Expo at Gikondo show grounds on Friday.

By opening a BRD Gira Icumbi account, a customer will be eligible to borrow money to buy or build a house after accumulating savings with the bank worth a least 10% of the total cost of the planned project.

The advantage is that interest rate of the loan is heavily discounted at 0.5%, 1% and 1.5% in a year, two years and three or more years respectively.

This is arguably the lowest priced mortgage loan in Rwanda today. It is important to note that at the end of savings period, normal Terms and conditions for the acquisition of a mortgage loan in BRD will be applied notwithstanding the fulfillment of the conditions of Giri Icumbi savings account. I addition to lower borrowing rates, Gira Icumbi also attracts currently a good interest of 8% per annum on the savings. However, this will be subject to adjustment according to REPO rate at the time and earned interests are payable annually.

BRD Director of Operations, Mr Evode Nshimimana, said that the product is designed to help monthly salary earners who desire to buy or build house but cannot afford the minimum requirement down payment to secure a mortgage.

"If you are a salary earner, it may not be easy to raise 10% of your project. That is why we encourage people to start saving and then qualify to borrow," he said. He said that this facility is particularly good because the savings also earn interest.

BRD officials say that Gira Icumbi has the potential to spur growth in the construction sector and reduce the country's housing deficit because it will encourage investors into real estate business.

"Investors fear building many houses because they are not sure of selling them. But with this kind of product, we can work together. We at the Bank will be able to tell them the exact number of people who would be eligible for a mortgage each year so they can build houses in advance knowing that potential buyers are there," Nshimimana said.

BRD has since the acquisition of Rwanda Housing Bank been broadening the range of products available to clients with the introduction of retail banking services. Clients who meet the requirements to open accounts with the bank can now be facilitated to open accounts such as Saving, Housing Savings Plan.

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