Shelter Afrique managing director James Mugerwa (left) with Jamii Bora CEO Samuel Kimani during the signing of the loan deal in Nairobi Sep 10, 2014. PHOTO | SALATON NJAU
What you need to know:
Jamii Bora will target mortgage borrowers with net monthly incomes of less than Sh100,000.
Shelter Afrique loaned the cash as part of a strategy to give low-income earners access to credit for housing.
It is estimated there are about 20,000 mortgage loans in the country despite the booming property industry.
Jamii Bora Bank has secured Sh100 million seven-year loan for lending mortgage borrowers in the underserved low end of the market.
The facility from pan-African mortgage lender Shelter Afrique will target mortgage borrowers with net monthly incomes of less than Sh100,000. Shelter Afrique loaned the cash as part of a strategy to give low-income earners access to credit for housing.
Managing director James Mugerwa said the facility targets the class it defines as those earning a net monthly income of less than Sh100,000, a group it says finds it hard to access mortgages.
It is estimated there are about 20,000 mortgage loans in the country despite the booming property industry.
Borrowers under this facility will pay interest not exceeding 20 per cent per annum and the maximum loan term has been set at 20 years.
“The loan terms will be between five and 20 years depending on the amount and the customer needs,” said Jamii Bora chief executive Sam Kimani.
Loan amounts have also been capped at Sh2 million per borrower.
The bank said it will continue with its policy of making access to credit easier including accepting certificates as collateral in some cases.
Mr Kimani said the policy takes into account that the majority of Kenyans buy large tracts of land as groups and then issue certificates as they wait for titles to be processed.
Shelter Afrique did not indicate at what rate it is lending Jamii Bora the cash. Mr Kimani, however, said there are expectations that rates will gradually come down, lowering the chance of borrowers accessing the facility at the maximum 20 per cent interest rate.
Shelter Afrique has been increasingly lending to micro-finance institutions and housing co-operatives that target the low-end of the market.
In July it advanced the Kenya Medical Association (KMA) Housing Co-operative Sh740 million to construct houses in Mombasa County. Shelter Afrique loaned KMA Housing the cash at a 13.5 per cent interest rate.
In the same month the Pan-African mortgage firm loaned Uganda’s National Housing and Construction Company (NHCC) $9 million for delivery of low income housing in the neighboring country.
Earlier in the year the firm secured Sh442 million from the French Development Agency (AFD) and said interest on loans to end-users would be capped at 13 per cent.
The mortgage market has remained stagnant as most Kenyans prefer to build or by their homes.
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