, NAIROBI, Kenya, Sep 3 – In an effort to increase uptake of mortgages by the middle and lower end of the market in the country, Housing Finance (HF) has launched a new product that will finance up to 105 percent of the property value.
The product dubbed, Ezesha, will cover the property cost, stamp duty and the professional fees for the customer.
Speaking during the product launch, HF Managing Director Frank Ireri said the new product targets borrowers who have affordability to repay a home loan, but do not have the deposit required.
One of the major stumbling blocks to home ownership, he said, has been the upfront payments such as down payments, stamp duty valuation and legal fees which account for about 18 percent of the property cost.
“The solution will accelerate home ownership as borrowers will not have to wait for years accumulating a deposit to access mortgage. For example, a person seeking a mortgage of Sh6 million would previously be required to raise at least Sh900,000 to meet down payment and closing costs, which is now fully covered by the firm,” Ireri pointed out.
The product is available to mortgages below Sh15 million and customers with incomes of up to Sh350,000 per month.
The interest rate applicable to Ezesha loan is 15.9 percent on a reducing balance and customers can repay the loan for a maximum period of 20 years.
“The low and middle income class forms a high proportion of the Kenyan population and the trend is expected to continue increasing housing demand,” he added.
On his part, National Treasury Cabinet Secretary Henry Rotich said the government will on his part continue to play a facilitative role to ensure that other constraints to mortgage uptake in the country are addressed, especially the high interest rates.
He also pledged to increase budgetary allocation to the National Housing Corporation to increase the supply of affordable housing units.
“We are currently working with all the relevant agencies to also address the housing problem of our police force and the armed forces. We will soon be rolling out that project and many others,” Rotich said during the launch.