The National Housing Corporation (NHC) has started advancing home construction loans of up to Sh3 million to rural area residents at a rate of 13 per cent on a reducing balance repayment.
The loans are intended to ease the huge housing supply gap, and are limited to a maximum of 50 per cent of the estimated cost of the proposed house.
The money will be drawn from a Sh200 million fund which NHC targets to increase to Sh600 million in three years if it records strong uptake.
The home building loans will be repayable in a maximum 10 years during which time the property will be held as a security.
The corporation has only been accepting titles of properties in urban areas as security. The interest rate is below the current market average of 16.3 per cent, although NHC says it reserves the right to review the rate.
Managing director Henry Maina said devolution and infrastructure growth informed the decision to start lending to rural residents.
“Rural and peri-urban housing has grown over the past few years with infrastructure development expanding into the counties, this has made most Kenyans venture more into home construction in peri–urban areas,” he said.