STANBIC Bank Tanzania has launched home refinance loans, coming as a packaged product for people wishing to own homes of their dreams.
Speaking during the launch, Bank`s Managing Director Bashir Awale said his company is on the look out for the welfare of its customers, and they are looking for ways of making their customers` lives better by offering them products that will improve their lifestyles.
He said terms and conditions for borrowing and repayment are flexible and especially the repayment period where one has up to fifteen years to repay the loan.
This is typically a subprime loan scheme meant for persons with limited credit histories. Such loans carry a higher rate of interest than prime loans to compensate for increased credit risk, although the Stanbic charges were not made public.
``To repay the loan a customer is required to make monthly payments which should not be more than 30 percent of one`s gross income. The repayment period for the loan will be 15 years despite the fact that, bank will allow lump-sum or clearance of the full loan at any time without penalties, he added.
Stanbic is one of the very few banks in Tanzania to venture into subprime mortgages lending as it is risky for both lenders and borrowers due to the combination of high interest rates, allegedly poor credit histories (which can be extraordinarily inaccurate) and potentially adverse financial situations that are sometimes associated with subprime applicants.
Subprime car loans are the most favourite to local banks. Bankers have for long complained that country�s land laws are not good enough to support subprime mortgages.
Speaking on the launching yesterday, Deputy Minister For Finance and Economic Affairs, Jeremiah Sumari, said the government recognises the crucial role that financial sector plays in fostering economic growth and poverty reduction.
Minister Sumari said the government has been implementing comprehensive financial sector reforms aiming at increasing the sector�s contribution to the economic growth and poverty reduction.
``The sector however remains dominated by a banking sector that is concentrated in large towns, but at the same time large section of our population remain unbanked, and have no access to any form of modern financial services,`` Sumari said.
He said, to achieve increased access to decent housing therefore, Tanzania requires solutions that would bring in all sectors including, more importantly, the banking sub-sector.
He said the government and other stakeholders are implementing the second generation of financial sector reform programme to strengthen the contribution of the financial sector to investment and growth.
``I would like to commend the Stanbic Bank for the innovative home loans product which will significantly contribute in improving access to decent housing in Tanzania, the move is timely, given the rapidly growing population and the resultant rising demand for housing facilities``, he added.
Minister Sumari said the government is taking several measures to ensure smooth implementation by private sector initiative, such as mortgage financing, formalisation and registration of the informal assets such as customary land plots and improvement of infrastructure such as roads, water system, land survey and the provision of site services.
* SOURCE: Guardian
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