Affordable housing to lift mortgages sector
SEE ALSO :KBA: Watch out for money launderers“Apartments (segment) maintained their dominance in the housing market, accounting for relatively high share of sold units at 62.62 per cent, which is a structural feature that would potentially change with the implementation of the affordable housing programme of the Big Four agenda,” said KBA director of research and policy, Jared Osoro. Kenya has only 26,187 mortgages worth Sh223 billion, which is a mere 2.7 per cent of the gross domestic product, compared to South Africa whose mortgage market makes up 31 per cent of their GDP. Banks say Kenyans do not save, so lenders depend on borrowed money to fund mortgages and hence the high cost and short duration. They also claim that without a clean asset register, they factor in additional legal costs to list a charge in case of default. Kenya Mortgage Refinancing Company - which has over Sh35 billion seed capital from the World Bank and Africa Development Bank - is set to offer bulk funding to banks who will then be able to give loans of up to Sh4 million. The loans are to be extended at fixed rates to borrowers, with a monthly income of not more than Sh150,000. While the house prices are also expected to change, KBA says it may not be as drastic, since the segment being targeted by the state for intervention is entirely a new one which will create more buyers, but not necessarily divert current buyers from the homes being provided by the market. “This will be a creation of a market where none had existed, leading to a structural adjustment,” Mr Osoro said. [email protected]
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