Ray of hope for future home buyers
SEE ALSO :Reduce the stress of loans and mortgagesCEO Joshua Oigara said the lender would also increase repayment periods. “What we should be looking at are individuals who want long-term loans of 15 to 20 years,” he said. The formation of KMRC has brought optimism to the mortgage market, which for a long time has not registered any meaningful growth. The Government-backed entity, which is expected to launch next month, will provide low-cost home loans, thus enabling more Kenyans to buy homes through mortgage. According to the Central Bank of Kenya’s Bank Supervision Annual Report 2017, there were a total of 26,187 mortgage loans with a total value of Sh27.3 billion as at December 2017. The average mortgage loan size stood at Sh10.9 million.
SEE ALSO :Ex-MCAs owe county millions in car loansAffordable mortgages This, he added, will boost the affordability of mortgages and help achieve the bank’s strategy in the growth of the mortgage asset. “Affording a mortgage has two aspects to it: availability of affordable housing units and access to long-term affordable end-user credit. By leveraging technology and through the Government’s support, we are slowly addressing the high cost of housing units with the aim of bringing the prices as low as practically possible,” Mr Muturi said. Kenya Bankers Association CEO Habil Olaka added that all banks were invited to contribute to the pool, and most of them have expressed interest in contributing into KMRC. Being a long-term financing model, it will help address the supply side of financing housing, he said, adding that this would make homes accessible and affordable. “The challenge in the mortgage sector has been both on the demand and supply sides. Banks have not been addressing this and KMRC will be largely tackling the supply side by providing long-term funding.” Among the banks that have already announced that they will contribute to KMRC are HF Group, which announced it would be selling its existing loans to KMRC, KCB Bank and Standard Chartered Bank. Kenya’s real estate market has recently been affected by a dip in home sales, which resulted in a rise in related loan defaults. According to a 2018 Central Bank of Kenya quarterly report, 11.3 per cent of the Sh392.7 billion gross loans extended to investors in land and houses by commercial banks were not being serviced as at the end of June. The report found that non-performing loans in the sector rose by 15.8 per cent between April and June last year to Sh44.4 billion compared to the previous quarter. Property developers recorded the highest growth in loan defaults compared to other sectors.