Chinese firms offering Kenyan home buyers good choices
Updated: 2014-05-06 16:43
(Xinhua)
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Banks in the East African nation are charging mortgage interest rates between 13.9 percent and 19 percent, which have discouraged developers. But Chinese investors charge lower mortgage rates.
"With mainstream lenders hanging on with 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 many Kenyans from home ownership," noted Carole Kariuki, the MD of The Mortgage Company (TMC) while releasing a report for quarter one of the sector's performance last week.
The report showed only 1 percent of Kenyans living in urban areas can currently afford mortgage repayments for a house priced at $66,279, and a further 4 percent for a house priced at $45,358.
Kariuki further noted that half of all Kenyans living in urban areas, specifically Nairobi, cannot afford loan repayments to buy a house at $8,139.
However, while she called for government's intervention either through supporting mortgage-backed securities to stimulate the secondary mortgage market, or through the creation of housing funds and even mortgage subsidies, she acknowledged the low mortgage rates charged by some Chinese investors.
"We have seen some Chinese investors offering interest rates of less than 10 percent because of their financial muscle and support they get from home, this is a good thing."
One of the investors is offering Kenyans a mortgage rate of 8.5 percent per annum for 25 years for a house going for $69,767. This is the lowest in the Kenyan market today.
There are currently a paltry 20,000 mortgage accounts in Kenya, and this has been attributed to high rates of most lenders.
"To make a real difference for the average Kenyan, mortgage rates need to reduce from the current 16 percent to between 6 percent and 9 percent a year. This will be a major shift, but it is still not enough to allow for universal home ownership," said Kariuki.
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