Affordable homes plan a boost to mortgages
SEE ALSO :Refresh your house with indoor plantsThis is not a good trend and an urgent intervention is needed to change the narrative. That is why the government’s plan to provide 500,000 affordable units under the Big Four Agenda is welcome. The move will not only lead to increased mortgage uptake, but also bring about social impact by contributing to the Sustainable Development Goals through sustainable human settlements. But how did we get here? The biggest reason is high property prices and developers’ obsession with the high-end market segment. In Nairobi, for instance, developers have mostly concentrated on high-end areas like Lavington, Kilimani and Westlands, to the exclusion of the affordable segment. Demand and supply In mortgage financing, we are guided by demand and supply. Over the years, however, it has become clear that the supply side of the equation is where the challenge lies, primarily because there have often not been enough units, or the ones available were far too expensive.
SEE ALSO :New industries to spur town growthConservative government estimates indicate that Kenya is dealing with a backlog of two million housing units, with the deficit growing by 150,000 units every year due to several factors, including the limited availability of mortgage finance and developer finance. As a bank, our mortgage offering is based on a customer qualifying for certain limits, but the challenge has always been that while most customers across the industry qualify for houses costing under Sh5 million, there are no such houses available. These would be ideal for the average working Kenyans paying rent of up to Sh30,000 per month. The industry has grappled with this dilemma for years and the government’s focus on affordable housing therefore presents a much-needed breakthrough, with the winds now shifting downwards to the untapped bottom of the pyramid. Through the Kenya Mortgage Refinance Company (KMRC), an initiative of the National Treasury and World Bank, the government will support the affordable housing agenda by providing secure, long-term funding to mortgage lenders, thereby increasing the availability and affordability of mortgage loans to Kenyans. KMRC will boost demand whereas on the supply side, we have the government through the Ministry of Housing, the National Housing Corporation and the private sector developers who will put up the houses. As financial institutions, we are plugging into the demand side to provide long-term mortgages to Kenyans who qualify to buy these houses. [email protected]
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