Local commercial banks have seen an upsurge in loan defaults including mortgages since the outbreak of COVID-19, which has resulted in some customers losing their properties to the banks.
“As a result of the Covid-19 impact over the past 12-18 months, the bank has seen an increase in the number of consumers who have been unable to meet the loan repayment commitments,” Boga Chilinde Masebu, Communications and Public Relations Manager at First National Bank Botswana (FNBB) said.
While the bank has recently advertised some properties for sale, Masebu was quick to point out that many of the properties currently held for public sale relate to litigious matters that predate the onset of Covid-19.
“The Covid-19 relief moratoriums offered to our clients did however manage to assist many families, and allowed for the resumption of payments at the conclusion thereof,” she said.
Masebu added that it is not unexpected that a number of highly impacted clients have been unable to resume normal loan repayments as a result of their financial circumstances, which resulted in an increase in home loan defaults.
According to Masebu FNBB considers all possible avenues for restructuring before matters are placed into a litigation status.
“Regrettably, not all requests meet the restructure criteria, and therefore the legal collection is followed as a last resort,” she said.
Head of Research at Motswedi Securities, Garry Juma said he would not be surprised when banks start repossessing people’s properties due to the tough economic environment.
“It is not surprising if that happens because the COVID-19 has worsened the situation and many people have found themselves without any source of income,” he said.