Kenya Commercial Bank and the NCBA Bank Group are among Kenyan banks in a list of shame of banks with hidden mortgage charges in Kenya. The two banks have been flagged by the Competition Authority of Kenya (CAK).
The CAK found out that the two lenders were giving information to customers that was not complete, that was unfavourable, and that was not clear. The hidden mortgage costs, including valuation, origination, booking, mortgage and title transfer, commissions, brokers’ fees, legal fees, insurance and stamp duty, can exceed 10 percent over and above the mortgage rate.
According to a report that appeared in the Business Daily on Tuesday, in the list are other banks including Absa Kenya, DIB Bank Kenya, Mayfair Bank, Consolidated Bank, Victoria Commercial Bank, and Bank of Baroda.
“From the reviewed T &Cs, twelve (12) banks were found to be non-compliant with Section 56 of the Act on unconscionable conduct and consequently they were required to revise their T&Cs,” said CAK director-general Wang’ombe Kariuki. “As at 30th June 2021 eleven (11) banks had revised their terms and conditions and informed the Authority of the roll out while the remaining one (1) requested for an extension of time.”
Kenya currently has 26,971 home loan borrowers. In this list of shame, the majority of these have taken home loans at KCB, NCBA, ABSA and DIB.
According to the Central Bank of Kenya, high incidental costs such as legal fee, valuation fee and stamp duty have been major stumbling block to the uptake of home loans in Kenya.
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“Institutions suggested a number of measures to be put in place to support the residential mortgage market in Kenya. Some of the suggested measures include streamlining and simplifying the legal and regulatory process governing the mortgage sector for transparency, efficiency and certainty,” the CBK said in a status report.