Mortgage uptake tipped to improve

At less than 5 per cent, Kenya’s outstanding mortgage debt to GDP ratio is still low compared to countries like South Africa and Namibia where the ratio is above 20 per cent.

In developed markets such as the US, the ratio is over 70 per cent.

This is despite the fact that Kenya’s mortgage market is the third most developed in sub-Saharan Africa, with assets equivalent to over 2.5 per cent of the country’s gross domestic product, according to a World Bank report.

It is estimated that the residential mortgage finance market stands at more than Sh200 billion accounting for about 25,000 loans.

Some of the barriers to increased mortgage uptake include funding, affordability, a complex legal and regulatory framework, collateral requirements and a tedious land and property registration process.


The situation has been worsened by high property prices thus discouraging potential homeowners from borrowing.

“There has to be a conscious effort towards addressing this low penetration. This should focus both on the demand and supply side. We have to critically assess how many suitable developments are brought to the market annually and how are financiers shaping their product offerings in line with the potential borrowers’ needs,” says David Idoru, Head of Retail Banking at Standard Chartered Kenya Ltd #ticker:SCBK.

The bank has already taken the lead in addressing affordability concerns by introducing low-priced Kenya shilling and dollar mortgages which allow customers access up to Sh100 million at 13 per cent annual interest rate for Kenya shilling and 6 per cent annual interest rate for dollar mortgage.

The Kenya shilling mortgage is part- fixed rate mortgage package, where customers enjoy the low interest rate for the first two years after which the loan will be charged at market rate.

Mr Idoru, however, observes that there has been remarked improvement in mortgage uptake in the country largely driven by a growing middle class, increased disposable income, infrastructure development and diaspora remittances.

Said Mr Idoru: “We have had an overwhelming response from our Priority customers following the launch of our mortgage proposition last month. We are on course to disbursing the Kes four billion mortgages as per our target.”

Standard Chartered offers mortgage facilities in Kenya Shillings and United States Dollars up to Sh100 million, a maximum of 25 years.

“This means you will never have to compromise on the house you really want for yourself and your family. With longer loan tenor periods of up to 25 years, monthly repayments are affordable,” he said.

Standard Chartered's mortgage facility is open to Kenyan citizens, permanent residents and expatriates.

The facility is available to salaried employees, businessmen and professional consultants who earn a regular monthly income.

Non-resident Kenyans are eligible too.