Commercial Bank to Offer Interest-Free Mortgages to Diaspora Community
May 18, 2019 (Ezega.com) -- The Commercial Bank of Ethiopia (CBE) has announced that it has started offering interest-free mortgage loans to non-resident Ethiopians, and foreign nationals of Ethiopian origin.
The program was designed to cater to Ethiopian Diaspora Muslims and others from the diaspora who want interest free banking service.
The loan is meant to be used for the purshase or construction of residential homes. The loan is expected to paid in 20 years.
Borrowers are expected to deposit at least 20% of the mortgage amount in advance in British Pound, USD or Euro.
Emebet Melese, Vice President of Quality Assurance, said during the launch that the interest free mortgage loan for diasporas would be implemented separately from the other diaspora related banking services.
Once a person deposits the initial payment at CBE branches in Ethiopia or at Ethiopian Embassies abroad, the bank would entertain the request, she said.
Quarterly mortgage payments are also expected to be in foreign currencies.
Ethiopia is one of few countries that has limited mortgage facilities. Home buyers usually pay full price upfront, limiting the ability of young people and those with limited means to buy homes.
Even for those who are able to secure bank financing, the interest rates are often very high, ranging from 10 to 20 percent.
Whereas in developed countries one can secure fixed loan rates for the duration of the loan, In Ethiopia, the interest rates can vary from year to year as dictated by the government.