The Mortgage Company’s Managing Director Caroline Kariuki says the institutions dedicated to providing finance are themselves stunting the take-off of the mortgage market.
Speaking on Thursday as she launched the mortgage report for the first quarter of 2014, Kariuki urged the government to intervene either through supporting mortgage backed securities to stimulate the secondary mortgage market or through creation of housing funds as well as mortgage subsidies.
“With the mainstream lenders hanging on with such tenacity to such high margins on their lending , the delayed take-off in Kenya’ s mortgage market is distorting the country’s housing range discouraging private developers and locking out all bar the elite from home ownership,” said Kariuki.
She has also pleaded with banks to cut their rates as the institutions unveil profits of larger scale every financial year.
Kariuki says at current interest rates, half of all urban Kenyans cannot afford to even buy a house worth Sh700,000.
She revealed that only one percent of urban Kenyans can afford mortgage for a Sh5.7 million house, with another four percent affording mortgage repayments for a Sh3.9 million house.
“For behind every emerging economy and every economic growth story lies affordable finance, as we have seen only too vividly in Brazil in recent years, where cheap housing finance has delivered a doubling in the middle class and a more than doubling of the mortgage market as a proportion of Gross Domestic Product,” She said.
In the period under review Commercial Bank of Africa cut its rates from 17 percent to 15 percent fixed for four years while Barclays Bank of Kenya reduced their rates from 15.5 percent to 14.9 percent however Standard Chartered Bank remains the lowest cost lender at an unchanged 13.9 percent.
“The Deputy President has now called for an enabling environment to allow Kenya to achieve one million mortgages up from today’s 20,000 but the rates of the most of the main mortgage lenders remained unchanged, “says Kariuki.
The first quarter also saw a revival in both prices and activities in the property sales market with sales prices for detached and semi detached houses rising by 1.8 percent from January to March compared with the fourth quarter of last year while apartment prices rose by 2.3 percent on the previous.
“We are also seeing a growing trend of foreign developers who have a huge head start over their Kenyan counterpart through the access of lower cost fiancé from their home nations,” said Sakina Hassanali Head of Marketing and Research Hass consult limited.
Hassanali said that most foreign investors are interested in estates near Nairobi.