Q1 report cover


Mortgage sector

Mortgage loans from December 2017 constituted an average of 12-14% of the total productive sector lending.  There was a sharp decline from a double-digit figure of 19.54% recorded in June 2019 before SI142 of 2019 5.65% in December 2019. This is because banks are increasingly adopting a cautious lending approach and thus not issuing out as much loans and further, the product seems greatly trailing behind inflation.

Figure 4: Percentage distribution of mortgage loans December 2017 – 2019

“Commercial property values are dependent on the rental cash flows, as such the organizational capacities to pay rentals will be compromised which will affect property values”

Source: RBZ Monetary Policy statements

Mortgages returns remain negative in real terms with inflation above 500% while interest rates now at 25%. Secured lending will remain viable either way as any default the borrower loses more and banks would benefit more from defaults when they repossess.

Download the full Propety Market Report Q1 – 2020.