Government open to Innovation in Real Estate Financing while safeguarding Financial Stability, says PM

Government remains open to innovation in real estate financing to support the development of a modern, efficient and diversified mortgage and credit market, while ensuring housing affordability and financial stability, said the Prime Minister, Dr Navinchandra Ramgoolam, yesterday, in the National Assembly.

Replying to a Parliamentary Question on the real estate sector, Dr Ramgoolam stated that Mauritius already has an established mortgage and housing finance market through commercial banks, insurance companies and the Mauritius Housing Company Ltd, which provide long-term financing for the purchase, construction or improvement of properties.

He explained that a buy-to-let mortgage differs from a traditional mortgage as it is intended for the purchase of a property for rental purposes rather than owner occupation. Under such arrangements, lending institutions also consider the expected rental income generated by the property when assessing a borrower's repayment capacity and the amount of financing to be granted.

The Prime Minister noted that buy-to-let mortgages could help expand access to rental accommodation, encourage private investment in housing and diversify mortgage products available on the market. However, he cautioned that such products could also increase household indebtedness, heighten the exposure of financial institutions to the real estate sector and fuel speculative pressures on residential property prices.

Addressing the possibility of introducing a buy-to-let mortgage market, Dr Ramgoolam indicated that the introduction of such products is primarily a commercial decision for banks and other eligible financial institutions, based on market demand, risk assessment and internal credit policies.

According to information from the Bank of Mauritius, the existing regulatory framework already allows banks to offer such products. The PM added that buy-to-let mortgages may require lower loan-to-value ratios, meaning borrowers would need to provide larger down payments, while banks could charge higher interest rates to reflect the greater risks involved.

Regarding lending based on the equity of existing residential properties and the income-generating potential of investment properties, the Prime Minister said the Bank of Mauritius had not received any proposal from the banking sector on such financing arrangements. Should such a proposal be submitted, the Bank would assess the associated risks, prudential requirements, impact on financial stability and the need for appropriate regulatory safeguards before determining whether any regulatory framework should be introduced, he said.

On the modernisation of the mortgage lending framework, Dr Ramgoolam pointed out that any changes would need to strike a careful balance between improving access to housing finance and protecting borrowers, depositors and the stability of the financial system. He said that consideration would also have to be given to the effects of additional credit growth on property prices, household debt and housing affordability.

The Prime Minister reaffirmed that while buy-to-let mortgages could support investment and increase the supply of rental housing, their development should be pursued prudently to ensure that greater access to finance does not come at the expense of affordability or financial stability.

Dr Ramgoolam reiterated Government's commitment to fostering a modern, efficient and diversified mortgage and credit market that responds to the evolving needs of households, investors and the wider economy.

05 August 2026

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Topics: National Assembly