Central Bank of Kenya. FILE PHOTO | NMG Mortgage loans disbursed by financial institutions dropped by Sh5 billion last year as customers rattled by the Covid-19 economic fallout adopted a cautious stance.
Outstanding mortgage loans were reported at Sh232.7 billion in the 12 months to December, compared to Sh237.7 billion in a similar period to 2019, the Central Bank of Kenya’s Bank Supervision Annual Report 2020 shows.
The health pandemic has forced employers to shed jobs and institute pay cuts leading to reduced demand for houses with fear to re-service the loans hence affecting the mortgage books.
The decline also coincided with the aggressive move by Housing Finance to recover bad loans while exiting the home construction business as announced in 2019.
The firm last year also disclosed that it acquired property worth Sh717.1 million over unpaid loans, relating to houses in which the bank entered into private treaty agreements with its customers.
CBK data showed mortgage loans issued by HFC almost halved to Sh26.09 billion from Sh40.1 billion in 2019, which saw its second position in the residential mortgage financing market taken by Stanbic Bank with KCB Group leading.
KCB mortgage loan portfolio increased by 4.4 per cent to Sh69.06 billion in the year, while Stanbic Bank outstanding loans increased by 7.6 per cent to Sh30.54 billion.
“This (decrease of Sh5 billion) 2.1 percent decrease was mainly due to repayments and decreased mortgage facilities advanced by banks due to effects of Covid-19,” the report stated.
The average mortgage loan size increased marginally by 1.2 per cent to Sh8.6 million.
The number of loans declined by 1,022 to 26,971 mortgage loans from 27,993 in 2019 due to low demand by home-buyers and as well as need to preserve capitals by financial institutions amid high defaults on personal and household loans.