HF mulls fund to offer affordable mortgages

Mortgage lender HF Group is engaging international financiers in a bid to create a fund that will allow the group offer below market interest rates for affordable housing.

Under the model prospective home owners will be able to access between Sh1.5 to Sh4 million through a special fund with repayment set at 10 percent of the borrowed amount.

HF Group Managing Director Frank Ireri said home ownership had become a struggle for millions of Kenyans, unable to keep up with the high cost and length of mortgage payments.

Without naming investors the lender was talking to, Mr Ireri said the fund would ensure prospective buyers are not burdened by mortgage repayments.

“We are already talking to a number of impact investors to create the fund for on lending to customers. The idea is to keep mortgage repayment as low as possible and closer to what the prospective customers are now paying as rent in order to convert as many rent payers as possible to homeowners,” Mr Ireri said.

HF Group plans to start with a seed fund of Sh10 billion for the project expected to kick off in 2018.

“The alternative would have been to raise this money through the capital markets, but the problem with this is that the returns to investors would have been capped at prevailing market rates, which would have pushed up the cost of mortgage,” he said.

Report by Cynthia Nyabola