, NAIROBI, Kenya, Nov 11 – The National Housing Corporation (NHC) has announced that it will maintain the 13 percent interest rate for mortgages.
The move is in a bid to provide decent and affordable housing to all Kenyans in the midst of the ongoing economic crisis.
According to Managing Director Andrew Saisi, the rates will be maintained at 13 percent for a period of 18 years for tenant purchase clients and 10 years for the rural and peri-urban housing loans clients.
“We will therefore not increase our interest rates since we have a responsibility to the tax payers,” he said.
This follows the raise on base lending rates from 8.50 percent to 10 percent by the Central Bank to stem the shilling’s depreciation against the dollar. The rates have been stable at 15.4 per cent in the past 12 months, having dropped from 16.91 per cent in July 2014.
Saisi further said that he is optimistic that the current high interest rates will fall in due course noting that the government has put in place measures to cushion itself from the economic crisis within the short term and thus no need to pass the effects to NHC’s clients.
“There are indications that the shilling is gaining strength against the dollar and soon we expect the economy to stabilize. Therefore, we believe our products are the most affordable in the respective segment of the market and want to keep it that way. In fact, we ensure that our houses are at least 20 percent cheaper than the market rate.”
Ongoing projects by NHC include 120 maisonettes in Stoni Athi, 80 apartments in Langata, 80 apartments in Kisii, 700 apartments in Kisumu Kanyakwar, a mixed commercial and residential development in Kibera, Nairobi as well as a Commercial Centre in Langata, Nairobi.
The corporation has various products and services among them the tenant purchase housing scheme and the rural and peri-urban housing loans. Additionally, it also lends up to Sh3million to Kenyans who wish to own decent homes in their rural or peri-urban areas.
The country had 22,013 mortgage loans in the market as at December 2014, up from 19,879 in December 2013. The average interest rate charged on mortgages was 15.8 per cent at the end of last year. The rates ranged between 8.0 percent and 21.3percent.
An increase in mortgage interest rates is likely to compound the constraints in the market.
The mortgage report for the first quarter of 2015 showed that commercial banks maintained their unusually high borrowing rates, despite the growing impact on the housing market in the country.