Stanbic Bank Kenya is courting prospective homeowners with a discounted fixed mortgage rate of 8.99 percent per year, available for three months, as the lender seeks to lift home loan uptake.
The rate is 7.27 percentage points lower than the average 16.27 percent that the lender currently displays on the cost of credit platform. It is also lower than the average interest rate of 14.9 percent that the banking sector priced mortgages last year.
The 8.99 percent fixed rate allows borrowers to tap up to Sh10.5 million and repay for a period of up to 20 years, without exposing them to the risk of movements in annual servicing costs.
“We believe homeownership is a key milestone tied to financial security and personal achievement for every Kenyan professional. The launch of our 8.99 percent per annum home loan is a bold, decisive step to challenge the status quo,” said Mwaura Mwangi, head of products at Stanbic Bank Kenya.
“We are not just offering a product; we are delivering the emotional benefit of security and the functional benefit of affordable financing to the growing middle class.”
The window for accessing the Stanbic mortgages on the discounted terms opens from November 15 to February 15 next year, giving customers eying homeownership a chance to tap the loans at a reduced rate.
The fixed rate means that borrowers will be cushioned from the potential rise in servicing costs as is the case with mortgages offered on variable interest rate terms.
Central Bank of Kenya (CBK) data shows about 85.9 percent of mortgages were at variable interest rates in 2024, compared to 88.4 percent in 2023, exposing the majority of borrowers to fluctuations in interest rates.
The market had 30,016 mortgages last year, up from 29,260 in the previous year. This was an increase of 756 mortgages, or 2.6 percent, mainly due to new home loans granted during the year.
The average mortgage size decreased to Sh9 million last year, down from Sh9.4 million in 2023. The average interest rate charged on mortgages in 2024 was 14.9 percent, ranging from 8.2 percent to 20.4 percent, compared to the previous year when the average was 14.3 percent, ranging from 8.7 percent to 18.6 percent.
The CBK data shows that Stanbic was the fourth largest mortgage lender in the country, with 2,164 mortgage accounts totalling Sh22.26 billion at the end of last year.
The value of outstanding mortgages in the industry was Sh279.3 billion last year, compared to Sh270.4 billion in the previous year. This represents an increase of Sh8.9 billion, or 3.3 percent, due to new mortgages granted in the year.
The average loan maturity was 11.1 years with a minimum of 5.3 years and a maximum of 18 years.
About 89.9 percent of lending to the mortgage market was by nine institutions. KCB Bank Kenya topped with Sh91.58 billion, accounting for 22.8 percent of the total value of all outstanding mortgages. Absa Bank Kenya was second with Sh31.29 billion or 11.2 percent market share, followed by HF Group with Sh23.12 billion mortgages, giving it a market share of 8.4 percent.
The outstanding value of non-performing mortgages increased to Sh46 billion last year, up from 39.9 billion in the prior year. The ratio of non-performing mortgages rose to 16.5 percent from 14.4 percent during this period.
