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StanChart slashes interest rate on fresh mortgages

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A StanChart bank branch in Nairobi. PHOTO | NMG

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Summary

  • Standard Chartered Bank of Kenya has cut the interest rate on new mortgages and waived legal and valuation fees for customers moving existing facilities from other banks in the latest bid to grow home loans.
  • Borrowers who take up new mortgages in the next three months ending October will enjoy the discounted rate — a cut from the 13.9 percent average that the bank charges currently.

Standard Chartered Bank of Kenya #ticker:SCBK has cut the interest rate on new mortgages and waived legal and valuation fees for customers moving existing facilities from other banks in the latest bid to grow home loans.

Borrowers who take up new mortgages in the next three months ending October will enjoy the discounted rate — a cut from the 13.9 percent average that the bank charges currently.

The product is a variable interest mortgage meaning that the rate changes with market conditions such as benchmark lending rates. Customers wishing to transfer their existing mortgages from other banks to StanChart will also enjoy waived legal and valuation fees — usually a stumbling block when one wants to move a mortgage from a bank to another.

“Customers who delayed decision on mortgage due to Covid-19 now have an opportunity. People with mortgages with other banks have a chance to move to us at no cost since we will pay the valuers and lawyers,” said Paul Njoki, head of wealth management at StanChart Kenya.

The lender hopes to ride on the discounted rates and waived costs to win new customers seeking mortgages of between Sh1 million and Sh100 million.

StanChart’s residential mortgages book last year shrunk to Sh21.98 billion from Sh21.42 billion in the previous period.

StanChart controlled 9.2 percent of Kenya’s mortgages dominated by KCB (29.7 percent), Stanbic Bank (13.1 percent) and HFC (11.2 percent). Its mortgage accounts also dropped to 1,942 from 2,042 coming in the period Central Bank of Kenya survey said Covid-19 disruption and high costs of houses were the top obstacles in uptake.

A brief from StanChart sent to customers show that a person servicing a 15-year mortgage valued at Sh8 million with an interest rate of 13 percent will save Sh1.029 million on taking the deal.

Valuation fees is usually charged at about two percent on the first Sh2 million of the mortgage plus 0.25 percent on amounts beyond this. Legal fees averages at 1.15 percent of the value of the mortgage.

This means that inclusive of value added tax, transferring a Sh20 million from one bank to another costs about Sh342,200. A Sh8 million mortgage would cost Sh147,320.

StanChart Kenya runs several mortgage solutions including purchase, equity release, construction, and non-resident to address diverse needs of clients.