The value of home loans jumped 5.7 per cent to Sh237 billion reflecting an increased appetite for homeownership and lower rates on mortgage facilities.
Central Bank of Kenya annual report data shows that mortgage loans increased by Sh12.8 billion at a time when average interest rates reduced from 12.4 per cent to 11.3 per cent.
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The period under review also saw customers bargain for longer repayment periods pushing the average loan maturity period from 10.6 years to 11.2 years.
“The value of mortgage loan assets outstanding increased from Sh224.9 billion in December 2018 to Sh237.7 billion in December 2019 due to increased appetite for homeownership,” CBK said in the report.
Kenya has a low mortgage penetration with 27,993 facilities at the end of last year a 6.9 per cent increase from 26,504 in December 2018.
The country is trying to boost the home ownership segment by lowering loan pricing through a state funded mortgage refinancer offering banks onward lending capital at concessional rates to be passed on to borrowers.
Kenya Mortgage Refinance Company (KMRC) has been raising money for on-lending— which amounted to Sh35 billion —from the World Bank and the African Development Bank.
Through this programme, Kenyans earning Sh150,000 and below per month are expected to start getting house loans from local banks and SACCOs at an annual subsidized interest of seven per cent or nearly half the prevailing market rates.