Money Markets
High cost of loans slows down real estate boom
A construction site. Real estate consulting firm HassConsult, has reported in its latest quarterly research note that several developers have shelved building plans and some are likely to stall, citing high borrowing costs since they rely on bank loans to fund housing projects. Photo/REUTERS
Posted Thursday, January 19 2012 at 19:16
“A slowdown in the construction sector will be compounded by diminishing effective demand for homes by the eventual buyers,” he added, but projected that lending rates would decline to support further growth this year.
Analysts in the banking sector have said the rising interest rates have led to a decline in the amount of loans that commercial banks have extended to the private sector, which shrank for the first time in over a decade in November.
Data from the Central Bank indicate that banks had lent out Sh1.2 trillion in November compared to Sh1.213 trillion in October. Though the numbers do not exclusively show a slowing credit appetite from the building industry, credit to the sector has been the fastest growing since 2009.
mmichira@ke.nationmedia.com
RSS