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Kenya Banks 105% Mortgage Financing & Africa Economic Boom
Kenya Banks are currently at 105% Mortgage financing. This means they are financing a person for total house and also on the closing costs. All the bank thereafter needs is the person’s ability to pay. Kenya housing sector is currently estimated to have a deficit of close to 4 million houses. However, this sector is just finding its rhythm as it progresses forward to anchor the Africa economic boom.
200,000 units of housing built every year both low cost and high cost could at an average price of Kshs 5 million, and financed through the 105% mortgage finance, would lead to a Gross Domestic Product of Kshs 1.05 trillion anchored by the financial institutions. At an average of 10% interest cost this would be an income of Kshs 100 billion for the financiers of the units.
The most crucial factor today is the development of good houses and settlements for Kenyans to live in. The outbreak of Ebola in West Africa calls for the quick supply of better settlements that have basic amenities, especially water, readily available in order to prevent spread of disease.
County Governments whose function it is to advance housing will need to create the right infrastructure to supply the houses with good county roads that then connect to the national roads. The county that the most property development will occur could be based on the county public infrastructure bill enacted. The county will also be able to get the most revenue through the property rate applied by the county government as set per Kenya Constitution 2010 (3) A county may impose— (a) property rates.
Kenya today is on the right track to establishing the right economic environment for housing sector take off. The, “Africa economic boom,” which could lead to close to 100 million persons residing in Africa becoming part of the middle class with a per capita income of about $10,000 will see the Africa Gross Domestic Product (GDP) currently at about $2 billion grow by $1 trillion.
The Kenya delegation to Washington D.C summit is reported as one that was aggressive enough to influence the discussion from U.S —Africa to one that felt as though it was a U.S – Kenya summit. If Kenya is able to tap the largest percentage of resources from the $26 billion "Power Africa," initiative then Kenya would be in a position to become the gateway to the Africa boom.
It is good to read that Kenya banks have already started tapping resources to grow the housing sector mortgage facility from the World Bank and other sectors. It is also time for those, especially in Diaspora, to leverage their extra dollar or shilling in the most productive sector, housing.