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The Mortgage Company,
The Greenhouse, 2nd Floor
Adams Arcade, Ngong Road
P.O. Box 29310-00100, Nairobi

Tel: +254 729 933955, +254 737 933955

Speech by Caroline Kariuki,Managing director of Mortgage Company on mortgage report in kenya

Caroline Kariuki, Managing Director,
The Mortgage Company

Thank you, Farhana, Ladies, Gentlemen, and members of the press, for your time and interest today in this second mortgage industry report. There can be few industries quite as relieved as the mortgage industry by last week's news of a final easing in the CBK base rate.

For those of us in the industry, we see home loans as an entry point to asset ownership that is more than a life-time repositioning. Homes, once fully owned, pass on to future generations, representing a permanent change in a family's wealth and costs. However, a mortgage is a long journey, and it is vital that every buyer who signs up for a home loan is positioned to achieve the best possible value and the best possible returns.

Mortgage buyers often pay substantially more month by month than renters, but even at the recent interest rate peaks, normally end up millions of shillings ahead of their renting counterparts. That gain is now set to increase sharply, in an environment of rising rents, and falling interest rates.

That said, for many landlords already locked in at lower rental incomes, and after more than two years of only negligible gains in house prices, the last three quarters have brought lower returns in rent and capital appreciation than the cost of mortgage finance. But we now see that this has been almost an isolated case of such net losses across the previous decade. With rates now falling, rents rising, and house prices set to rise, we forecast a progressive closing in this gap from here, and a return to positive gains for landlords too.

At the same time, for new entrants into the housing market, the last quarter has seen a downwards trend in mortgage costs, with StanChart moving to offer a rate of 16.9 per cent on mortgage takeovers with established credit history, CFC Stanbic cutting its fixed rate to 18.5 per cent, and the volume of non-bank mortgages expanding, at rates of around 14 per cent. Microfinance institutions are also now moving into home loans, although principally for land plots.

We have additionally presented the rates for the leading mortgage lenders, with a spread at the end of June between the most expensive mortgages, from Equity Bank and CFC Stanbic at 24 per cent, to the cheapest, from I&M Bank at 18 per cent, of a full
6 percentile points. In financial terms, the cheapest of these mortgages demands 24 per cent less in payments than the most expensive. This is important.

We have also calculated this time the payments needed to save a deposit and access a mortgage for properties from land plots to stand alone houses. On this basis, we calculate, for example, that saving Sh17,200 a month for five years is enough to access a Sh6m first home.

As it is, Kenya remains a property market where the majority of purchasing is done in cash by buyers wealthy enough to be able to hand over the asking price in one payment.

But, globally, home ownership has become the norm thanks most substantially to the mortgage industry, which enables salary earners to access homes, covering the rental and additionally accumulating an asset that moves into the family for generations. Worldwide, mortgages have served to transform the working classes into classes with assets and wealth. For mortgage brokers such as ourselves, we are always searching for the best mortgage deal for every buyer, and passionately believe in the long- term repositioning of individual families that our industry delivers.

But with every purchase there is the opportunity to get the very best deal available, and the risk of paying far more, and we do believe it is vital to familiarize every potential buyer with the terms on offer, and the returns each and every deal represents for them in the long term.

On which note, we should like to open for your questions, and take the chance, once again, to thank you all for your time and interest in joining us today.

Article source:

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Did you know

CBK rate cuts spark real estate

back to life

  • Developers and sellers pushed up asking prices in Q3.
  • Early in the quarter, buying activity had dropped to 2-year lows.
  • September marked a sharp rise in enquiries, viewings and completions.
  • Town house sales, where asking prices rose by 1.2 per cent in the quarter, performed better in September.
  • But so did stand alone houses, where prices rose by 3.4 per cent.
  • However, apartment prices recorded the sharpest rise, at 3.6 per cent.
  • Asking rents also rose sharply, by 4.2 per cent for apartments.
  • Activity in the rentals market also dipped, with fewer viewings and closures, but the drop was more marginal.
  • The rentals market appeared to have been able to sustain the rent rises rolled out in the three months.


Index Highlights

With all eyes on tumbling mortgage rates in the third quarter, property asking prices jumped in the last three months on
hopes of renewed activity, reported HassConsult, as it unveiled its third quarter property indices and drew on new
“activity” indicators based on levels of real estate enquiries, viewings and completions.
In a further expansion of the consultancy's real estate data collection offering new insights into market reactions and
uptake, Hass reported that the rental market largely absorbed the price increases of the third quarter, while properties
for sale recovered from their lowest levels in two years driven by a renewed uptake of standalone houses during
Overall, sales asking prices rose by 5.1 per cent, with the sharpest rise in apartments, up 3.6 per cent on the previous
quarter, followed by stand alone houses, up by 3.4 per cent. Price rises were more moderate for town houses, with sales
picking up sharply in September.
“We believe it is a correct analysis that as mortgages become more affordable and available, pent-up demand for
property buying will bring higher levels of sales activity. However, with property so fully priced in this market, sellers
seeking higher returns ahead of that surge in demand deterred some buyers in July and August rather than securing
greater revenues,” said Ms Sakina Hassanali, Head of Marketing and Research at HassConsult.
"September, however, saw a renewed appetite for buying, and comfort with the new price levels, offering relief for
developers, many of whom were becoming seriously stretched. The return to more normal levels of buying has come as a
return to life for the sector."
Meanwhile, in the rentals market, the overall rise in asking rents was 4.5 per cent in the third quarter, with the steepest
rise in apartment rents, up 4.2 per cent, followed by standalone houses, up 3.6 per cent. Town house asking rents also
rose 2.8 per cent over the previous three months.
With much of this re-pricing absorbed into the market, the returns for landlords recovered significantly across the
quarter, to a combined 13.81 per cent, across both rental yields and house price appreciation.
“The swelling in demand for rentals as those who would have been first-time buyers have stayed in the rental pool, even
as new entrants arrive, is fueling some continuing rent rises, although we do see signs of some slowing in viewing and
completions,” said Ms Hassanali.
“This rental correction was overdue for many landlords, after some years of stagnating rents, and is now closing the gap in
returns for mortgage-financed landlords that appeared after the mortgage rate rises.”

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




  • 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 3.83 times since 2001, a 3.4% rise in the last quarter and a 7.3% rise in the last year. The average price for a stand alone house is currently 33.7 million up from 8.8 million in December 2000.



  • 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 1.2% rise in the last quarter and a 7.2% 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.



  • Apartments include apartments, duplexes and triplexes.
  • Property values for apartments have increased by 2.33 times since 2001, a 3.6% rise in the last quarter and an 6.0% rise in the last year. The average price for an apartment is currently 12.1 million up from 5.2 million in December 2000.



  • 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 2.85 times since 2001, a 3.6% rise in the last quarter and a 12.8 rise in the last year. The average rental for a stand alone house is currently Kshs. 162,082 up from Kshs. 56,959 in December 2000.


  • Town houses include townhouses and maisonettes that are semi-detached or terraced.
  • Rental values for town houses have increased by 2.39 times since 2001, a 2.8% rise in the last quarter and a 9.1% rise in the last year. The average rental for a town house is currently Kshs. 102,048 up from Kshs. 42,688 in December 2000.


  • Apartments include apartments, duplexes and triplexes.
  • Rental values for apartments have increased by 2.88 times since 2001, 4.2% rise in the last quarter and aa 15.0% rise in the last year. The average rent for an apartment is currently Kshs. 66,987 up from Kshs. 21,638 in December 2000.
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