HF has announced that it will be offering low income earners home loans at a reduced cost.
The mortgage lender announced that it will be offering the loans at 10 per cent in a bid to to stimulate uptake.
Currently, HF is developing a product that will allow prospective homeowners access funding of between Sh1.5 million and Sh4 million under the preferential terms. This will be through a proposed special Sh10 billion fund in partnership with international investors.
“It is one of the things we are doing to help with the development of affordable housing. We are already talking to a number of impact investors to create the fund for lending to customers,” said HF Group MD Frank Ireri.
“The idea is to keep mortgage repayment as low as possible and closer to what the prospective customers are now paying as rent in order to convert as many rent payers as possible to homeowners.”
Average mortgage rose to Sh8.3 million in 2015 from Sh7.5 million in 2014 and Sh6.9 million in 2013, official data from industry regulator, the Central Bank of Kenya, shows.
There were 24,458 mortgage loan accounts in December 2015, which was a growth of 11.11 per cent year-on-year from 22,013 accounts, but which is low in a country with a population of more than 44 million people. The mortgages were valued at Sh203.3 billion, a 23.96 per cent growth year-on-year.
The low uptake has largely been linked to high cost of housing, interest rates and high incidential costs – valuation and legal fees as well as stamp duty. These concerns have largely been blamed for big deficit in housing for low and middle-income segments, with developers concentrating on high-end segment to reap maximum returns.