HomeNewsOld Mutual injects $15 million into CABS

Old Mutual injects $15 million into CABS

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CABS says its parent, Old Mutual Zimbabwe, has approved a $15 million purse for mortgage lending, which will be committed to a low-cost housing scheme in Harare, reviving lending.

CABS managing director Kevin Terry said the lender was struggling to replenish its loan book, which ran dry in the third quarter as demand soared and coincided with capital flight, triggered by the speculation about elections that has hit the financial industry lately.

Terry said the new capital from Old Mutual would be used to fund a low-cost housing scheme in Harare’s Budiriro suburb.

“Old Mutual have set aside $15 million for us to put into low-cost housing but not all of it will go to the Budiriro scheme,” Terry said.

“We have not finalised costings. Unfortunately, the City of Harare only made available unserviced stands so we will have to fund off-site infrastructure such as water and sewerage. We have current plans to build
1 500 houses in Budiriro and then sell them with a mortgage.

“That project is in the planning stage at present. There is an opportunity for a further 1 500 houses in the same place once we have done the first phase.”

CABS resumed mortgage lending this year after it fallowed accounts for three years and disbursed $15 million.

However, the portfolio was too lean to satisfy market demand, which made a strong rebound when the economy dollarised last year.

The building society reintroduced facilities with a maximum tenor of 10 years, at lending rates of 10-15% per annum.

Analysts say the current speculation about elections has triggered a deposit flight, which has affected the capital base of lenders.

Building societies and banks normally rely on deposits to cheaply build loan books.

According to analysts, lenders are likely to find it difficult to grow their loan books, unless confidence returned in the near term.

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