NAIROBI, Kenya, Feb 8 – Kenya’s housing bubble is not expected to burst any time soon as demand from the middle income bracket continues to rise, an analyst said on Monday.
CFC Stanbic Bank Home Loan Manager Peter Ondieki said the number of mortgage applications from this bracket was an indication of the appetite in the property market. He said mortgage companies have also been on a conscious drive to expand their product range to cater for this new emerging market.
“The property market in the last couple of years has seen a boom, demand right now still outstrips supply of property,” Mr Ondieki said. Financial analysts have recently pegged the property market as one of the drivers towards economic recovery in 2010.
Mr Ondieki said the demand for low cost housing has resulted in an equal split between the high and low-end property market.
“For every development of between Sh3 million and Sh5 million you still get your Sh50 million developments; the difference is the volumes in which the low end are coming in with,” he said.
This latest trend also comes at a time a property index released by Hass Consult showed that the market was undergoing price corrections after an initial burst in 2006.
Mr Ondieki spoke as he announced an enhanced CFC Stanbic Bank’s home loan product. The move will see the introduction of Equity Release, which allows customers to unlock the value of their home by borrowing money against their property.
The bank has also introduced access mortgage, where customers make lump sum deposits into their home loan account with no additional cost and can withdraw funds at any time.
“We previously only provided home loans for amounts over Sh5 million but we have now lowered this to Sh3 million,” Billy Lynch, Director of personal and business banking said.
Mr Lynch also revealed that the bank had lowered its interest rates from 17 percent to a negotiable rate of between 15.25 and 15.75 percent.
The bank is expected to unveil vacant land financing, pension backed lending and off plan financing in the next three months.
“This is aimed to make our home loan products more attractive and take us beyond the 50 mortgages we finance a month,” Mr Lynch said.