More Mortgages for Property in Kenya

Good news for the property market in Kenya this week, more mortgages for property in Kenya are now available from leading local lenders and the choice of mortgage and refinance products available has also improved.

The availability of greater financing, more flexible products and an increase in the number of lenders offering finance to buy property in Kenya should improve the market and the overall real estate economy…but according to local property industry insiders there are ways that lenders can improve things still further.

To date Kenya’s property market and overall real estate economy has been restricted like so many others around the world as a result of the fact that affordable, secure, long term finance was largely unavailable for construction projects and to enable local citizens and even international buyers to afford to buy property in Kenya.

The result of this restriction is that the amount of construction taking place in Kenya compared to the demand for property is way under the mark and many who would like to afford their own home simply cannot come close to raising the full asking price for property and so cannot get on the housing ladder.  Additionally, overseas real estate investors who would like to get involved with property targeting the tourism market for example have to source their investment capital from overseas lenders or stump up the full cash amount themselves.

All in all this situation has limited the appeal of real estate in Kenya…

Now that more lenders have come forward with a diverse range of mortgage product this week, the property market could be about to see a turn around in its fortunes.  Savings and Loans (S&L), a subsidiary of the Kenya Commercial Bank as well as Stanbic Bank have announced that they want to lend more money and as a result they have new products available. 

S&L are offering the likes of bridging and equity release finance as well as fixed rate mortgages with interest rates fixable for between one and five years and mortgages available for up to thirty years; Sanbic Bank also has a new equity release finance product available as well as a 100% mortgage…but this latter mortgage is only available for those buying properties at the top end of the market who can prove their own affluence and ability to match the loans payments.

Really if the property market in Kenya is to begin developing healthily, more mortgage products should be introduced to help the lower income families get a foot on the housing ladder.  Local Kenyan property experts have suggested to us that the introduction of 100% loans for lower income families would be a sensible addition to the home finance product marketplace - but lenders are reluctant to consider such products because of the restitution difficulties they face if clients default on a loan.

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