NEW HOUSING MORTGAGE PRODUCT TO BOOST HOME OWNERSHIP

Britam has launched a new product targeted at housing mortgage lenders that will see home ownership in Kenya rise significantly in the coming years.

The product, Collateral Replacement Indemnity, allows lenders the opportunity to provide 100 per cent housing loans to their clients.

Speaking during the launch, Britam Group Managing Director Benson Wairegi, said the CRI product will secure the equivalent of the required deposit as against losses incurred from defaulters of sale of mortgaged properties.

 “Many borrowers struggle to come up with the required 30 per cent deposit to secure a mortgage plan. This puts the lender at risk of losses in the event the agreement is defaulted. The CRI product will ensure that the lender is cushioned against such losses,” said Wairegi.

The CRI product allows the lender to remain in an equivalent risk exposure, as it would have with a cash deposit, but enables access to mortgage finance to buyers with affordability, while growing its mortgage advances book.

The Collateral Replacement Indemnity product comes at a time when mortgage uptake in Kenya experienced a significant drop due to increased interest rates as well as inaccessibility to the required deposit by borrowers.

Wairegi said that the CRI product was targeted at borrowers in the middle to lower income mortgage market and borrowers with the affordability to pay a home loan but do not have the deposit required.

“We are making home ownership possible for those who ordinarily would have difficulty acquiring a mortgage plan. We had a vision to provide reprieve from challenges that come along with renting housing properties, “said Wairegi.

The growing economy and consequent rapid urbanization has increased demand for housing in Kenya pushing up the mortgage market from approximately 7,600 homes in 2006 to 20,000 homes in 2012.

Experts have projected that in the coming decades, the interest rates subjected to loans by mortgage lenders will reduce and interest in mortgaged housing facilities will increase, resulting to more demand by borrowers.