Kenyan banks have averagely cut mortgage maturity by more than a year to 10.9 years, but increased interest rates, handing consumers a double blow in their dream to own homes.
According to a recent Banking Supervision report from the Central Bank of Kenya (CBK) banks increased interest rates on home loans from 11.3% in 2021 to 12.3% last year but cut the loan maturity from 12 years to 10.9 years.
“The average interest rate charged on mortgages in 2022 was 12.3 percent and it ranged from 8.2 percent to 17 percent compared to an average of 11.3 percent with a range of 7.1 percent to 15 percent in 2021,” said the CBK.
An analysis carried out by Business Daily attributes the increased interest rates on home loans to a decision by the apex bank to raise basis points, piling pressure on potential homeowners.
The double blow for consumers coincided with a spike in the number of non-performing mortgages in the banking sector, rising by the sharpest margin in five years to Sh37.8 billion, translating to a 33.6 percent jump compared to the Sh28.3 billion in the previous year.
Data from the CBK showed KCB, the largest mortgage lender by market share, reported the sharpest increase in bad home loans, hitting Sh14.6 billion in 2022.
This accounted for 50.6 percent of the total Non-Perfoming Loans (NPLs) in tier-one banks from Sh8.9 billion in 2021.
Bad loans from nine large banks, including KCB, Absa and other listed lenders, accounted for 76.3 percent of the total NPLs in 2022 from 65.8 percent in 2021.
article source: Business Daily Kenya (https://www.businessdailyafrica.com/bd/markets/banks-cut-mortgage-terms-by-a-year-raise-interest-on-defaults–4243578)