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Home loans fast gaining traction

A borey under construction on the outsirts of Phnom Penh.
A borey under construction on the outsirts of Phnom Penh. Heng Chivoan

Home loans fast gaining traction

Acleda Bank has provided $40 million to customers in the form of housing loans since the start of 2017, marking a growing trend of home loans being taken out across the country.

In Channy, president and CEO of Acleda, told Post Property that by the end of last year, Acleda had provided housing loans to the tune of $210 million. Now, within less than six months, it has recorded another $40 million and 433,000 active customers.

“We haven’t restricted the processes, however, we don’t offer loans to those who buy houses to rent or sell back. It’s because if they cannot rent, they will face financial issues to return the money,” he said, adding that Acleda’s housing loan is only applicable to those who buy homes with the aim of staying in them.

Hout Ieng Tong, CEO of Hattha Kaksekar Limited microfinance institution (MFI), stated that Hattha Kaksekar had been active in giving out housing loans for the past four years. Twenty percent of the MFI’s assets – a total of $446 million – are attributed to loan-seekers with the purpose of investing in the real estate and construction sector, with interest rates ranging between 12 and 16 percent per year. “The interest rate varies according to the size of loan and how risky the customers might face when returning,” Ieng Tong said.

“The housing loans we have given out total an average of $95 million per year as the customers who use Hattha Kaksekar’s services keep increasing,” he said.

Since April, MFIs have not been able to provide loans of more than 18 percent interest following a cap imposed by the National Bank of Cambodia. According to the 2016 annual report of the NBC, 1.9 million MFI clients took out a total of $3 billion in loans.

The trend of applying for housing loans to purchase real estate, particularly houses, has shown an uptick because banks and MFIs have made the process easier, according to Century 21 Mekong CEO Chreak Soknim. A growing number of young Cambodians below 30 are breaking off from the traditional family dynamics to live on their own or with their spouse, and are unable to afford buying a house, thus they seek housing loans.

“At present, I think 80 percent of the home buyers are using loans from banks,” Soknim added.

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