CFC Stanbic Bank draws homeowners to city’s outskirts

This along with other measures can help push down the prices of construction to the Sh18,000 per square metre threshold.

Developers will also be able to produce up to 5,000 units within 30 days increasing the rate at which houses are being churned to the market, adds the property developer.

The 2009 Economic Survey showed that the housing demand far outstripped the supply.

Against an annual demand of 150,000 units, the market is only able to produce 30,000 units.

Other government efforts to woo private investors to fill this gap include the introduction of pension-backed securities which have been credited for lowering the initial fees, the first hurdle in home-ownership.

CFC Stanbic bank joins other competitors such as Housing Finance in introducing a package that takes advantage of the government policy but the bank’s personal and business banking director, Mr Billy Lynch, says that upfront costs still remain high.

“Many buyers are unaware that there are many extra costs that go into purchasing a house,” said Mr Lynch.

Stamp duty for example adds four per cent to the purchase price and interest rates have not come down despite inflation easing.

Central Bank of Kenya has lowered its basic lending rate to seven per cent in the hope that banks would follow suit but the CFC director of business and personal banking says that the cost of funding coupled with a liquidity challenge makes it difficult for rates to come down.

CFC Stanbic’s mortgage rates oscillate between 15.25 and 15.75 per cent but by allowing borrowers to speed up or pump in extra money that may come as a bonus, the borrowing rates lower in the long-term says My Lynch.

Central Bank of Kenya has lowered its basic lending rate to seven per cent in the hope that banks would follow suit but the CFC director of business and personal banking says that the cost of funding coupled with a liquidity challenge makes it difficult for rates to come down.