[Kenya] Housing Finance targets prospective home owners with low interest mortgages

Kenya’s premier mortgage lender Housing Finance has announced that it intends to introduce a credit facility that will allow subscribers access loans at below market rates, as it seeks to increase home ownership numbers in Kenya.

The facility that will target those in the low and middle income bracket will give potential home owners funding of up to $40,000 through a special fund with repayment set at 10 per cent of the borrowed amount.

“We are already talking to a number of impact investors to create the fund for lending to customers. The idea is to keep mortgage repayment as low as possible and closer to what the prospective customers are now paying as rent in order to convert as many rent payers as possible to homeowners,” said HF Group managing director Frank Ireri.

He said the project will be rolled out in mid 2018 with $100 million seed capital, with investment recipients to include small businesses, social enterprises and real estate and infrastructure projects.

“We want to look at the challenges in the current market conditions, with an aim of turning them to opportunities for both our clients and the organisation,” added Ireri.

HF chose impact investors because the type of funding resonates with the idea of providing cheap mortgage to the targeted groups as compared to alternative means such as capital markets, which would cap returns to investors at prevailing market rates and push up the cost of mortgage.

The lender has been banking on its property development arm Kenya Building Society (KBS) to tap into the lucrative housing market, which still has a huge deficit.

“The housing need as we are informed is about 250,000 houses a year. But only 30,000 houses are built annually due to the affordability gap,” said Ireri.

www.hfgroup.co.ke