The new home loan scheme launched by Botswana Building Society (BBS) to specifically benefit young people has been hailed as a move in the right direction.
The Pinagare scheme has similar features to the mortgage product available to the general public but offers lower interest rates and a 30-year repayment period as opposed to 25 years.
The main objective of the scheme is to encourage young Batswana to own houses instead of buying cars. Pinagare mortgage attracts a 14.5 percent variable interest rate, which is 2.5 percent below the prime lending rate.
A 30-year-old Francistown court interpreter, Letsweletse Mophalane welcomed the new housing loan scheme, saying young people are facing difficulties in investing in fixed assets. He said he has been working for five years but he does not own a house.
He said many young people see a car as priority and not a luxury and this is why at times they consider buying one first before a house. But he said if banks like BBS have introduced accessible home loan packages, then the youth can take advantage of them. He said they would also be forced to reduce on their drinking so that they invest in property.
Mophalane said the government is introducing agricultural schemes which might attract young people to go into farming. He said such schemes and the BBS efforts compliment one another. Another young professional, Tebogo Motsumi welcomed the BBS loan scheme because its interest rate is low. He said since the interest rates have been higher, it has been easier to buy a car than a house. He believes that this is why more people are buying cars than houses. However, Motsumi has not considered buying a house.
Maxwell Motowane, a partner at Motwane and Monageng Property Developers, said the Pinagare scheme is long overdue. "That would be a citizen empowerment programme," he added. He said every bank should do its utmost to capture the market targeted by Pinagare loan scheme.
He said young people have been showing interest in investing in property but they have been discouraged by the high cost of borrowing. Motowane said the cost of borrowing has been extremely high, at 16 percent. He argued that this discourages people from investing in property.
He feels that the banks can get more customers by lowering their rates. He added that the unavailability of houses for a certain income bracket frustrated them. The other challenge is the unavailability of land for further development in Gaborone.
He said young people can start by buying properties in places like Mmopane. He asserted that some young people are over ambitious and want to invest in upmarket suburbs when they cannot afford it. He said young people should be encouraged to invest in property and not cars because a BMW costs the same price as a house. But in five years, the price of the BMW would have depreciated, while the property appreciates all the time. "If you spend the first five years paying for a car, after that period it would have deteriorated." Motowane is encouraging young people to consider buying property before a car.He said the wealth of any country is measured by what people own especially high value assets like property.
Lesang Magang of Phakalane Estates, hailed the BBS scheme as a brilliant move. He said it is good to encourage young people to own property. He said young people have been showing interest in investing in property. "If we are going to have a stable country, we need anybody in gainful employment to be owning property," he said.
Magang added that they are coming up with a project to help young graduates to invest in property. He indicated that they are going to offer self contained one bedroomed apartments, to compliment BBS efforts.