Local banks’ house loans more costly, says report

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What you need to know:

  • Local commercial banks like Kenya Commercial Bank, Housing Finance, I&M Bank, Family Bank, Equity Bank, NIC Bank and Consolidated Bank are charging their mortgage borrowers between 16 per cent and 19 per cent despite the Central Bank’s benchmark rate being at 8.5 per cent

Local commercial banks are trailing their multinational counterparts in reducing the cost of owning a home in Kenya.

Some local banks are charging 10 per cent more on mortgage compared to their counterparts, according to a Hass Consult second quarter property report on developments in the real estate sector in Kenya.

The report says local banks charge as much as 10.5 per cent more than what foreign multinational banks, including Standard Chartered Bank and CFC Stanbic Bank, charge for mortgage facilities.

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This has seen some buyers opting to make cash purchases for property, further making it even more costly for those needing mortgage facilities to buy houses.

Cash purchases

“The housing market continues to be fuelled by cash purchases, with almost all Kenyan banks hanging onto their big profit gains from high lending rates, but there are some small signs of competition emerging from the country’s foreign banks,” said Hass Consult marketing manager Sakina Hassanali during the release of the Hass Property Index.

Local commercial banks like Kenya Commercial Bank, Housing Finance, I&M Bank, Family Bank, Equity Bank, NIC Bank and Consolidated Bank are charging their mortgage borrowers between 16 per cent and 19 per cent.

This is despite the Central Bank’s benchmark rate being at 8.5 per cent.

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