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SORAS—KCB launch mortgage initiative



Soras Assurances Generales Ltd (SORAS) the leading Insurer in Rwanda and Kenya Commercial Bank (KCB) Rwanda Ltd have jointly launched an exciting product called Collateral Replacement Indemnity (CRI).

With the new mortgage insurance initiative, all Rwandans will now be able to afford a house since SORAS has moved in to provide a full (insurance) cover for the otherwise required equity contribution (deposit of 30 %), in that, the lender (KCB) can now comfortably loan full amount to the borrower.

However, the insurance cover comes with affordable premium and the mortgage loan with a competitive interest rate of an average between 15-16 per cent per annum. This new product will also act as the collateral so that the lender (KCB) can provide 100 per cent of the loan and the borrower doesn’t have the added burden of saving for a deposit (equity contribution).

At the official launch of CRI product Friday March 16 at Hotel Mille Colline, Kigali Mr. Marc Rugenera the Managing Director of SORAS explained that the lender (KCB) purchases CRI product to cover the equivalent of the required equity contribution (deposit) in the event the bank suffers a loss after default at a legal sale of the mortgaged property.

This way, the lender remains in an equivalent risk exposure as it would have with cash deposit requirement, but enables the bank access to mortgage finance to buyers with affordability while growing its mortgage finance book. Clearly, it is a win-win for the bank, borrower and insurer.
Mr. Rugenera assured that: “We have in place a very strong and well organized and dynamic re-insurance programme that gives us the capacity and technical support to take on any risk for the safety of our clients. This programme is reviewed annually to increase SORAS’s capacity and flexibility to take on new risks in keeping with International Insurance dynamism”.

The Managing Director of KCB Rwanda, Mr. Maurice K. Toroitich explained that in rolling out this project the bank targets borrowers in the middle to lower income mortgage market; borrowers who can afford to repay a home loan but do not have the deposit required. CRI product thus benefits borrowers with monthly income of Rwf1.8million and below—intending to own any property (of merchantable quality and standards) worth between Rwf1-Rwf45million.

Mr. Toroitich said that CRI is an exciting product and is expected to attract big demand, especially the middle and low income earners and KCB is ready to take on any demand that may come by.

“We have earmarked Rwf4billion for this product. That is funding between 100-150 units (of houses) on average of between Rwf30-40million”, he said. The interest rate on CRI mortgage loans will vary between 15-16 per cent, he said.

However, Mr. Toroitich cautioned that the bank will not fund homes/houses of temporary nature…it has to be durable, built with quality materials.
Representing the National Bank of Rwanda (BNR), the Director of Non Bank Supervision Mr. Sangano Kagaba remarked that in the quest to achieve the targets of vision 2020, Rwanda strives to provide decent housing to its citizens, especially the poor.  “Access to finance and financial inclusion is remarkably still low in Rwanda. For instance, at only 1.7 % insurance penetration in Rwanda, we are among the lowest in the region—the East African Community (EAC),” he observed.

SORAS is the first private insurance company to be registered and to operate in Rwanda. It was established on July 2, 1984. SORAS re-insurers with the following global insurers; MINICH RE, SUISS RE, AFRICA RE, BEST RE, ZEP RE, CICA RE, and SCOR.

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