Mobilization of Capital for Mortgage Loans Portfolio Funding at Banque De L’habitat Du Rwanda

Abstract

This paper entitled “Mobilization of Capital for Mortgage Loans Portfolio Financing at Banque de l’Habitat du Rwanda (BHR)” is a result of research conducted in Rwanda in the above-mentioned bank. The overriding objective of the study was to uncover suited assets-funding tools that bank may embrace in order to raise sufficient loanable funds for the housing sector. Current estimates show dire shortages of housing in Rwanda with supply falling short more than 75 percent of demand. The study was performed under descriptive research design. Key data were gathered using study of document and questionnaires administered to managers of the bank. Managers targeted were involved in financing, credit administration, and loans recovery and contracts enforcements.  Challenges encountered by banks in mobilization of capital include under-developed capital market, absence of mortgage refinancing window in the country, low income by large number of clients and inadequacy of capital of the bank.  The study found the balance sheet of the BHR tiny in reference to highly-priced assets it is expected to finance. Furthermore, sizable sum of loanable funds originated from deposits and proven to be unmatched with long-maturity assets as mortgages. The study suggested that the bank takes on long maturity, suited asset-liabilities portfolio funding models such as assets-backed bonds, long-term borrowing and further recapitalization in owners’ capital to serve cushion for loss and exposures of the bank. There is also a need to develop secondary market for loans in order to enhance liquidity of banks assets and originate huge loans.

Keywords: Mobilization of Capital, Mortgage Loans, Portfolio, Financing, Banque de l’Habitat du Rwanda (BHR).