By Kibui Butt
As interest rates hit the roof, many borrowers desperately sought ways to lower their monthly obligations and keep a roof over their heads.
The word foreclosure is relatively new to most Kenyans, but our parents and their parents had all heard of people who defaulted on their loans and were never able to recover— it was tough trying to refinance out of rates over 30 per cent.
Now as the year rolls by, many young families are facing insurmountable costs to stay in their homes.
After banks raised the rates all across their portfolios instantaneously and chose to bring them down slowly, there will be more people looking to secure better rates with another bank to keep their monthly obligations down.
Owning a home is something we all dream of, it’s a goal that any couple would want to attain for their children and themselves.
As more people lose their homes under the heavy weight of interest rates, banks will have a glut of properties sitting in their portfolios. The fact that the Kenyan real estate market is on an upswing with little to stop it in sight has been a lifesaver for the banks.
If the market was flat and they had to move properties at a loss, then there would be plenty of panic in the industry.
Money is very costly, there isn’t enough of it to dedicate to long term lending and when faced with the prospect of clients refinancing to another bank or lender, then the loss of the interest income and a diminishing portfolio will be noticed and addressed when it could possibly be too late to effect changes to retain the business.
In Nairobi, a friend, let’s call him JJ for now, recently refinanced his home from one of the top three lenders and got a rate that was 3.95 per cent lower than his current loan.