Kenya’s average mortgage rises to Sh5.7m on home prices rally

Insurance application
The number of loan mortgages rose to 16,135 from 15,049 in May 2010. PHOTO/FILE
The average loan size issued to borrowers in the past two years grew by Sh1.6m, suggesting a rally in property prices.

According to a survey on lending conducted by the Central Bank of Kenya (CBK), the average value of mortgage loan rose to Sh5.7m last year from Sh4.1m in 2010 as home buyers borrowed more due to increased house prices.

Despite the increase in the average loan size, the number of loan mortgages rose to 16,135 from 15,049 in May 2010.

“Institutions identified high lending rates and lack of access to long-term lending as the main drawback to the growth of their mortgage portfolios,” said the CBK.

Several institutions, according to the CBK, expect the mortgage market to slow down in 2012 due to the rising interest rates, high costs of building materials and borrowers adopting a wait-and-see attitude as they await the outcome of the forthcoming general elections.

During the survey period the interest rates charged on mortgages ranged between 13 per cent and 26.7 per cent.