Connect with us

Hi, what are you looking for?

Capital Business
Capital Business


Non performing mortgage loans nearly doubles despite growing appetite

Despite the NPLs, the value of mortgage loans in Kenya grew from Sh203 billion in 2015 to Sh219 billion in 2016, a growth of 8.1 percent/FILE

NAIROBI, Kenya, Aug 30 – The value of non-performing mortgages increased from Sh11.7 billion in 2015 to Sh22 billion in 2016.

The Bank Supervision Annual Report by the Central Bank of Kenya shows that the ratio of non-performing loans to gross mortgage loans was 10 percent, 3 percentage points above the industry’s NPLs to gross loans ratio.

Despite the NPLs, the value of mortgage loans in Kenya grew from Sh203 billion in 2015 to Sh219 billion in 2016, a growth of 8.1 percent.

The number of mortgages in the market dropped marginally from 24,458 in 2015 to 24,085 in the previous year.

“The average mortgage loan size increased from Sh8.3 million in 2015 to Sh9.1 million in 2016 due to increased property prices,” the report quotes the Residential Mortgages Market Survey 2016.

Over 70 percent of the mortgage loans were issued by five financial institutions.

The report states that borrowers have shown increased interest in mortgage loans since the introduction of interest rate capping a year ago, but banks have on the other hand introduced tighter credit standards resulting in fewer mortgages disbursed in relation to applications.

Interest rate capping has, however, brought down average mortgage loan rates from 18.7pc in 2015 to 13.46 pc in 2016.

In the survey, banks listed ability of a client to repay, terms of employment and legitimacy of the property as the main risk factors when assessing mortgage applications.

Others include; credit history, collateral, property location and ease of sale in case of default and whether the property is owner occupier or rental.

Advertisement. Scroll to continue reading.

The survey identified a low level of income, high incidental costs, access to long term finance and high cost of construction as impediments to the growth of mortgage market.

Financial institutions reckon that provision of basic infrastructure by national and county governments and reduction of stamp duty for first time home owners would spur the growth of the segment.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...