Housing Finance eyes sh80b for housing
Jul 15, 2010
HOUSING Finance Bank plans to raise sh80b this year in an effort geared at increasing access to cheap housing loans.
By Ibrahim Kasita
HOUSING Finance Bank plans to raise sh80b this year in an effort geared at increasing access to cheap housing loans.
The funds will be used to finance the bank’s home ownership finance business and give long-term mortgages to clients, Nicholas Okwi, the managing director, said on Tuesday.
The firm will raise the money from both the local and international markets, he added.
“The local market does not provide sufficient money to meet demand, but it helps lower the cost of capital and lending rates for clients.
“We also have to look for foreign currency to have a mix that will allow us lend at a low interest rate to ensure affordability,†Okwi explained.
The move will go a long way in solving housing shortages in the country.
The announcement comes at a time when the mortgage bank raised close to sh10b of issuing its three-year corporate bond.
The final phase, which ended on June 29, was oversubscribed by sh6.6b.
This prompted the bank to increase the total bond offer to sh35b, up from sh30b, hence understating its financial position and strong investor confidence in the economy.
In 2007, the locally-owned bank, started the so-called note issuance programme, which is prepared like a corporate bond, valued at sh30b to be issued in batches.
The first three series commenced a year later and raised sh12.5b. The bank raised sh7.598b from the issue in 2009. However, in the latest and final issue realised sh16.5b, up from the needed sh9.9b, representing an over subscription of sh6.6b.
“Raising these funds means we have the liquidity to lend to more clients,†Patrick Kabonero, the executive director in charge of the development finance unit, said.
“Demand for mortgages has grown significantly this year, therefore, raising this money will provide a much-needed boost to our loanable funds basket.â€
Uganda is facing an acute housing shortage.
Experts predict that Kampala city alone will need about 250,000 units, while the rest of the country will require 450,000 in the next five years.
The successful issue of the corporate bond sets the stage for potential capital market-based innovations in the housing finance sector.
These instruments have significant influence on the cost of borrowing to finance home ownership and make the capital markets relevant in the mortgage industry. This is important for job creation.
“Since we know the growing depth of the capital markets, we will likely issue instruments for developers and home buyers,†said the bank’s investment boss, Njoroge Ng’ang’a.
HOUSING Finance Bank plans to raise sh80b this year in an effort geared at increasing access to cheap housing loans.
The funds will be used to finance the bank’s home ownership finance business and give long-term mortgages to clients, Nicholas Okwi, the managing director, said on Tuesday.
The firm will raise the money from both the local and international markets, he added.
“The local market does not provide sufficient money to meet demand, but it helps lower the cost of capital and lending rates for clients.
“We also have to look for foreign currency to have a mix that will allow us lend at a low interest rate to ensure affordability,†Okwi explained.
The move will go a long way in solving housing shortages in the country.
The announcement comes at a time when the mortgage bank raised close to sh10b of issuing its three-year corporate bond.
The final phase, which ended on June 29, was oversubscribed by sh6.6b.
This prompted the bank to increase the total bond offer to sh35b, up from sh30b, hence understating its financial position and strong investor confidence in the economy.
In 2007, the locally-owned bank, started the so-called note issuance programme, which is prepared like a corporate bond, valued at sh30b to be issued in batches.
The first three series commenced a year later and raised sh12.5b. The bank raised sh7.598b from the issue in 2009. However, in the latest and final issue realised sh16.5b, up from the needed sh9.9b, representing an over subscription of sh6.6b.
“Raising these funds means we have the liquidity to lend to more clients,†Patrick Kabonero, the executive director in charge of the development finance unit, said.
“Demand for mortgages has grown significantly this year, therefore, raising this money will provide a much-needed boost to our loanable funds basket.â€
Uganda is facing an acute housing shortage.
Experts predict that Kampala city alone will need about 250,000 units, while the rest of the country will require 450,000 in the next five years.
The successful issue of the corporate bond sets the stage for potential capital market-based innovations in the housing finance sector.
These instruments have significant influence on the cost of borrowing to finance home ownership and make the capital markets relevant in the mortgage industry. This is important for job creation.
“Since we know the growing depth of the capital markets, we will likely issue instruments for developers and home buyers,†said the bank’s investment boss, Njoroge Ng’ang’a.