Lenders reduce mortgage rates

HassConsult’s Farhana Hassanali-Hashmani (right) and Sakina Hassanali speaking at the Hilton Hotel, Nairobi, during the launch of the Hass Index and Mortgage report for the second quarter of 2014. PHOTO | JEFF ANGOTE  NATION MEDIA GROUP

In Summary

• StanChart announced a promotional rate of 10.9 per cent from 13.9 per cent a day after the setting of the Kenya Bankers’ Reference Rate at 9.13 per cent earlier this month. KCB’s rate, on the other hand, stands at 12.9 per cent down from 14.5 per cent a month earlier.
• I&M, Chase and Consolidated banks’ rates declined by one per cent each three months earlier to stand at 15.5 per cent, 17 per cent and 18 per cent, respectively. The highest is 18 per cent.

By JOSHUA MASINDE
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At least five banks have cut their mortgage lending rates over the past three months, signalling mounting pressure for lower charges.

 

The reductions, which ranged between three and one per cent, have slashed the average rates in the second quarter from 17 per cent to 16.3 per cent, according to HassConsult.

The banks are Standard Chartered, Kenya Commercial, I&M, Chase and Consolidated.

“These moves are expected to energise the country’s mortgage market. The next step should be standardising mortgage paperwork and building products designed for the self-employed,” Ms Caroline Kariuki, the managing director of The Mortgage Company, said.

StanChart announced a promotional rate of 10.9 per cent from 13.9 per cent a day after the setting of the Kenya Bankers’ Reference Rate at 9.13 per cent earlier this month. KCB’s rate, on the other hand, stands at 12.9 per cent down from 14.5 per cent a month earlier.

I&M, Chase and Consolidated banks’ rates declined by one per cent each three months earlier to stand at 15.5 per cent, 17 per cent and 18 per cent, respectively. The highest is 18 per cent.

TRANSPARENCY

Announcing second quarter indicators for the property sector, HassConsult property development director Farhana Hassanali said introduction of transparency in the cost of loans through the KBRR and the Annual Percentage Rate could further lead to rate cuts and stimulate mortgage uptake.

“Government-led initiatives to curb bank rates and reduce interest rate margins in the banking sector have begun to have an impact, although the uptake remains far from comprehensive,” Ms Hassanali said.

The second quarter experienced a surge in rental prices against a slowdown in mortgage uptake due to the considerably high interest rates.

“If people can’t afford to buy, they are going to rent. And, if they are pushed into the rental market, then the rent rises with the extra demand,” Ms Hassanali said.

Analysts believe that the push towards lower interest rates backed by transparency in the pricing of loans could ultimately lead to a decline in the rates.

The KBRR, which is at 9.13 per cent, sets the base upon which commercial banks will set their loans.