Govt eyes 7pc mortgage rate in housing program

The government is keen on ensuring that the affordable housing agenda for all becomes a reality by ensuring that houses built under this initiative are taken up by low and middle-income earners.

To achieve this end, the Ministry of Housing and Urban Development is targeting low lending rates of up to seven percent in an effort to drive demand for the low-cost housing.

Speaking during a stakeholders’ forum with the private sector, Housing Cabinet Secretary Macharia said his ministry was engaging with players from the private sector over the possibility of achieving the targeted mortgage interest rates.

“The cost of borrowing must come down substantially. We are looking at an average of about seven percent so that everybody is encouraged to go for these houses,” he said.

The government is looking at providing low income houses at Sh1.5 million. Social houses are set to cost between Sh600,000 and Sh750,000.

In addition to the low-lending rates target, the government has also setup the Kenya Mortgage Refinancing Company (KMRC) which is aimed at easing credit access by real estate developers in the country.

The mortgage refinancing company is expected to drive down construction cost which if successful it will have a knock on effect reducing the average cost of houses for consumers nationwide.

CS Macharia said bolstering the uptake of low-cost houses will and has brought on board a significant number of developers into the government’s housing agenda.

“If the cost of borrowing is kept low, then the uptake of those houses will be sufficient to bring in more developers to do more houses. We tested the market through an Expression of Interest (EoI) and had more than sixty companies coming forward,” Mr Macharia said.

By 2022, the government is seeking to bring on board a minimum of 500,000 affordable houses with a view of addressing the current housing dilemma in the country.