The average size of mortgages increased to Ksh7.5 million, making it difficult for a majority of Kenyans to own homes financed by commercial banks.
The Central Bank of Kenya (CBK) data shows that the average home loan rose from Ksh6.9 million in 2013 and Ksh6.4 million in 2012, a jump blamed on high interest rates, expensive homes and upfront fees.
Mortgage lending increased last year by nearly a fifth to Ksh164 billion held in 22,013 accounts, up from 19,879 a year earlier and 18,587 in 2012. “Banks identified high cost of housing/properties, high interest rates, and high cost of incidental cost as the major impediments to the growth of their mortgage portfolios,” noted the CBK.
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The average mortgage interest rate stood at 15.8 per cent last year, down from 16.37 per cent in 2013. At 15.8 per cent, those borrowing Sh7.5 million for 10 years will need to pay Ksh124,701 per month and Ksh109,108 if the mortgage runs for 15 years.
This makes it difficult for those earning less than Ksh300,000 monthly to qualify for the average home loans, given that banks demand that borrowers retain a third of the pay after all deductions.
A CBK mortgage market survey in December revealed that 22 per cent of the bankers interviewed cited the high cost of houses as the major impediment to mortgage uptake, with 21% of them blaming high interest rates.
Upfront costs such as legal fees, valuation fees and stamp duty were cited by 15% of the bankers as hurdles to accessing mortgage. (BUSINESS DAILY)
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