August 23rd 2017

Business / News

Housing Finance to help non-salaried people access mortgages

A 2014 study by salary explorer found that an average salary in Kenya was Sh147,182, making it difficult for such individuals to set aside 30 percent of their earnings to comfortably service an average mortgage of Sh7.5 million.

By Tobbie WekesaSunday, 05 Feb 2017 19:18 EAT

The Housing Finance Group has designed new products to help Kenyans purchase homes. In a strategic re-organization of its operations, the firm has come up with enticing products targeted at low-income earners and non-salaried customers to help them staircase their way to property ownership.

The mortgage financier said it has turned its sight to unbanked but prospective property owners and those with some access to financing models but are not fully satisfied with services in the local market. “After restructuring our operations, focus is now on this person who does not have a monthly income, or pay slip to confirm the same…what can we package for them, is the question that guides us now,” said HFC Managing Director, Sam Waweru. HFC is the banking subsidiary of HF Group.

Kenya’s urban housing is faced with acute shortage of houses producing only 30,000 houses annually against a demand of 250,000 units. The Household Survey report by FinAccess revealed that 90 percent of Kenyans earn less than Sh30,000 in monthly income with only three million people said to be on a pay slip. 

A 2014 study by salary explorer found that an average salary in Kenya was Sh147,182, making it difficult for such individuals to set aside 30 percent of their earnings to comfortably service an average mortgage of Sh7.5 million.

An average mortgage price has risen steadily over the last three years to grow by more than Sh1 million, having risen to Sh7.5 million last year from Sh6.4 in 2012 according to a Central Bank of Kenya (CBK) mortgage survey.

With these figures that predictively show a huge likelihood of high risks of default and low uptake of home loans, HFC has decided to go against the grain, moving into the uncharted territory without trepidation. “We want to look at the challenges in the current market conditions, with an aim of turning them to opportunities for both our clients and the organization”, Waweru added.

People without a salary survive and have money but they are the most avoided, argues Waweru. “Our experience has taught us that default rates for a common Kenyan out there, is actually lower than bigger corporate clients. We are not fearing the risks for this category of customers, because we believe it’s about having the right strategies to mitigate such,” he says.

HFC has confirmed it is not chasing after the three million Kenyans with salary accounts-targeted by over 40 players in the commercial banking space, with a strong sentiment there is a maximum to which the country’s banks can reach before they get choked.

A huge percent of its new clientele are considered risky because they lack collateral to ease their access to credit. “You can fear the risks so much that you sit back and do nothing, but we want to help the remaining population access financial services with ease,” he adds.

The company is establishing its mark into corporate banking that is dominated by most commercial lenders ‘but in a different way.’ Financing stocks, assets, provision of insurance and a host of other banking services will be filled up on its SME plate to avoid direct competition with other banks.

The writer is a contributing reporter for the Kenya Free Press





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