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An independent mortgage brokerage firm has entered Kenya’s mortgage market with a view to deepening property ownership and mortgage uptake in the country. The Mortgage Company (TMC Africa), the first mortgage broker in East Africa, hopes to revolutionise the home ownership value chain and hopes to rope-in informal income earners to take up mortgages. The firm will provide all-round services to potential mortgages – individuals and businesses – while shopping for the best financing options available in the market. By acting as an intermediary, the mortgage broker will be better placed to negotiate for tailored products with financiers for home purchase or construction loans.

Its position gives it an edge to keep tabs on developments in the real estate market and capacity to provided mortgage information. Traditionally, banks and other lenders sell their own products but presence of brokers is likely to see them introduce competitively priced mortgage packages.
“Our role as a mortgage brokerage is to complement financiers at all levels. We aim to simplify the experience of home ownership by negotiating with financiers on behalf of the client,” Caroline Kariuki, TMC Africa’s managing director, told The Star in an interview. “Our loyalty lies with the customer and we are committed to ensure they get the best and most straightforward deal when acquiring property,” said Kariuki, who is the immediate former divisional director of mortgages at KCB S&L Mortgages. She has over 18 years experience in the mortgage sector.

The mortgage broker will find direct lenders on behalf of clients for specific mortgage loans at a fee while saving the client money and time taken to close deals. It will work closely with credit reference bureaus in carrying out debt scoring to establish the credit risk of borrowers, while advising on appropriate mortgage product. It will negotiate with financiers and handle structuring of deals. “Usually, the draw-down time for most projects is about two years from the time a client begins negotiations with financiers but we can cut this to about three months,” said Kariuki. She said the firm will partner with lenders to develop new mortgage products that suit different kinds of customers in the market. “We aim to exploit the life-time value of the customer – from right out of college to retirement. We’ll be offering more than just mortgage options. We’ll assess customer needs and advice accordingly.

“As an independent player, I can see the existing gaps and the pains customers go through. For instance, we need products for informal incomes and for SMEs. Also, most people may not know that they can take up joint-ownership mortgages. At some point, we may need to have reverse mortgages, foreign-denominated loans and refinancing options for individuals and companies,” said Kariuki. Kariuki said in the next stage, the firm will venture into mezzanine financing by providing a hybrid of debt and equity financing to developers wishing to expand their property investments. Equity financing could see it partner with insurers and pension funds, with the potential of reaping lucrative returns of well over 35 per cent of investment value. TMC has been in the market for four months and has already handled transactions worth over Sh1 billion for about 10 corporate clients. It’s currently targeting developers, high net-worth individuals and groups. It charges one per cent the value of the mortgage for its services, which can be as little as Sh50,000 according to Kariuki.


The firm aims to enlist at least one million mortgage accounts in the next five years. Kenya’s mortgage market is still small with a mortgage debt of 2.5 per cent to the GDP, distributed in about 16,000 outstanding mortgage accounts in 2010. “We wish to see more people choosing to invest in property than rent, and this will not affect the rental market,” said Kariuki. TMC will pay closer attention to the retail market (individuals) and will be holding mortgage clinics every weekend to tap the numbers. “Unless you give someone a key to unlock their potential, then you are not serving the needs of the market – that’s where the rubber meets the road for us!” she said. In developed mortgage markets like the UK, Canada and the US, mortgage brokers are the largest sellers of mortgage products for lenders.

Article source: http://www.the-star.co.ke/business/property/45280-mortgage-broker-forays-into-kenya

 
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Did you know

Housing market activity rebounds on CBK rate cuts

back to life

  • Rent price rises in quarter four 2012 far greater than sales price rises
  • Asking rents rose by 4.1 per cent in the final quarter of 2012, over the previous quarter, with steepest rises at top of the market for standalone properties
  • Asking sales prices rose by 1.7 per cent, much more slowly than in the third quarter of 2012
  • Both renting and sales activity rose sharply, however, after a profound drop in the middle of last year, with viewings by purchasers rising to levels approaching the first half of 2011, before the interest rate hikes

 

Annual Index Highlights:

HassConsult today unveiled the Hass Property Index results for the final quarter of 2012, showing a sharp upswing in viewing and enquiries, but still relatively flat sales pricing - although rental prices continued to rise steeply across all segments of the market.

“The sensitivity of buyers to interest rates, even in a largely unmortgaged market, has shown up very sharply in sales activity and pricing in the last 18 months,” said Sakina Hassanali, Head of Research and Marketing at HassConsult. “With rates slashed, enquiries returned to much the same levels of early 2011.”

However, sales prices are taking somewhat longer to gain momentum. Pushes for higher sales prices in quarter three achieved little real gains, seeing asking prices remain largely static in the final quarter.

But asking prices for rentals continued to climb strongly. With asking rents rising by an overall 4.1 per cent, the biggest rises came at the top of the market, where rents for standalone properties rose by 5.2 per cent on the previous three months, making for a 17. 2 per cent increase from January to December 2012.

“The upwards correction in rents, as buyers have held off for better financing terms, has been particularly strong after the relatively flat rentals market in the preceding two years, and may yet take some months to level out,” said Ms Hassanali.

Even the previously stagnant apartment rental market recorded further rises in asking prices, up 2.1 per cent on quarter 3 and 15 per cent on the final quarter of 2012.

“Overall, the picture is of a market returning to buoyancy,” she said.

“Rental yields are now stronger, following the year of rental rises, and financing is moving into a steadily more affordable range. This combination augurs well for a strong year in real estate in 2013, based on financial fundamentals and despite all the uncertainty that comes with an election year.”


For more information, please contact:
Sakina Hassanali - Head of Marketing & Research
HassConsult Ltd
ABC Place, Westlands
Tel: +254 020 4446914

 

 

SNAP SHOTS:

  • Stand Alone houses include houses, bungalows, cottages and villas either on their own plot or in a gated community.
  • Property values for stand alone houses have increased by 3.92 times since 2001, a 2.3% rise in the last quarter and a 11.7% rise in the last year. The average price for a stand alone house is currently 34.5 million up from 8.8 million in December 2000.

 

SNAP SHOTS:

  • Town houses include townhouses and maisonettes that are semi-detached or terraced.
  • Property values for town houses have increased by 2.95 times since 2001, a 0.1% rise in the last quarter and a 6.4% rise in the last year. The average price for a town house is currently 19.3 million up from 6.5 million in December 2000.

 

SNAP SHOTS:

  • Apartments include apartments, duplexes and triplexes.
  • Property values for apartments have increased by 2.35 times since 2001, a 1.1% rise in the last quarter and an 5.7% rise in the last year. The average price for an apartment is currently 12.2 million up from 5.2 million in December 2000.

 

SNAP SHOTS:

  • Stand Alone houses include houses, bungalows, cottages and villas either on their own plot or in a gated community.
  • Rental values for stand alone houses have increased by 2.99 times since 2001, a 5.2% rise in the last quarter and a 17.2%% rise in the last year. The average rental for a stand alone house is currently Kshs. 170,469 up from Kshs. 56,959 in December 2000.

SNAP SHOTS:

  • Town houses include townhouses and maisonettes that are semi-detached or terraced.
  • Rental values for town houses have increased by 2.48 times since 2001, a 4.0% rise in the last quarter and a 13.9% rise in the last year. The average rental for a town house is currently Kshs. 106,122 up from Kshs. 42,688 in December 2000.

SNAP SHOTS:

  • Apartments include apartments, duplexes and triplexes.
  • Rental values for apartments have increased by 2.94 times since 2001, 2.1% rise in the last quarter and a 15.0% rise in the last year. The average rent for an apartment is currently Kshs. 68,383 up from Kshs. 21,638 in December 2000.
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