Only 896 civil servants access cheap mortgage

Civil servants houses in Kileleshwa, Nairobi. PHOTO | JEFF ANGOTE 

By EDWIN MUTAI

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Summary

• Only 0.15 percent of civil servants or 896 public workers were advanced mortgage loans under the Civil Servants Housing Scheme Fund in the year under review, documents from the fund show.
• The majority of civil servants find it difficult to access the loans and meet a rule that requires them to retain at least one-third of their pay after taxes and other deductions.
• Housing PS Aidah Munano said the loan repayment period was prolonged from 18 years to 20 years to facilitate low monthly loan repayments to beneficiaries.

Less than 1,000 civil servants have benefited from the government mortgage scheme launched four years ago with home loans worth Sh3.5 billion.

Only 0.15 percent of civil servants or 896 public workers were advanced mortgage loans under the Civil Servants Housing Scheme Fund in the year under review, documents from the fund show.

The Salaries and Remuneration Commission approved car loans that range between Sh600,000 and Sh10 million while the mortgage scheme will range from Sh4 million to Sh40 million depending on the grade of an individual.

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The majority of civil servants find it difficult to access the loans and meet a rule that requires them to retain at least one-third of their pay after taxes and other deductions.

Housing PS Aidah Munano said the loan repayment period was prolonged from 18 years to 20 years to facilitate low monthly loan repayments to beneficiaries.

The interest on both the car and mortgage schemes is three per cent per annum on reducing balance — a favourable term given bank loans currently average 14 per cent.

“Based on the one-third rule, the level of pay in the civil service and prevailing home prices, it is safe to say that the mortgage will be restricted to mid and top cadre State workers,” said an executive in a local bank that deals with home loans.

Though the government scheme provides mortgages of less than Sh4 million, civil servants in job group H, whose average pay is Sh35,000, would struggle to access a home loan of Sh3 million that will demand a monthly repayment of Sh17,000.

The mortgage is capped at Sh40 million for top earners like the Attorney-General, Chief of Defence Forces, governors and the Auditor-General. Those below job group F are capped at Sh4 million.

Job group F includes artisans and storekeepers, E includes clerical officers and telephone operators, drivers and cooks fall under D while C, B and A include cleaners, sweepers, guards and other support staff. University graduates, whose mortgage is capped at Sh6 million, start from job group J.