Top mortgage lenders record mixed results in first quarter

Kenya's top mortgage lenders have posted varying results on uptake of mortgages in the first three months of 2012. While KCB attributed its increased profits for the first quarter to increased mortgage lending, Housing Finance reported a 38 per cent drop in uptake in the same period despite a 11 per cent jump in profits.

HF said the drop was ocassioned by high cost of funds and increased inflationary pressure that saw potential first-time home buyers delay taking up loans. “We have witnessed a drop in mortgage sales which is mainly as a result of a rise in interest rates which mainly affected those entering the mortgage market,” said managing director Frank Ireri.

HF recorded Sh190 million in Q1 profits compared to Sh171 million in a similar period a year before. Mortgage interest income for the stand-alone mortgage lender grew by 46 per cent to Sh951 million compared to Sh651 nillion in March 2011. It's loans disbursement levels also rose to Sh2.2 billion from Sh1.9 billion in a similar period in 2011.

KCB, East Africa's largest bank by asset classification, posted a 35 per cent rise in pretax proofits in the three months to Sh3.4 billion from Sh2.5 billion in a similar period in 2011, attributed to increased lending to mortgage, SME and corporate clients.

The bank's mortgage book has grown to Sh33.7 billion from Sh15.6 billion in 2009, translating to a 40 per cent market share. “In the past one year, KCB has seen an upsurge in mortgage lending at 49 per cent following the roll out of this product into Rwanda, Uganda and Tanzania,” said Martin Oduor-Otieno on Thursday.

The bank, already in five countries, said it will cross over to Burundi this month with two start-up branches. “The strong investment in our regional business over the past five years has greatly contributed to the turnaround of their individual performances,” said Oduor-Otieno.

HF, Kenya's second largest mortgage lender, on the other hand said it has now turned its focus to mobilising long term funding to deliver affordable loans to middle and lower income target market.

Mortgage brokerage firm TMC said in a first quarter mortgage report that uptake slowed in the market owing to high interest rates. The broker's report showed lowest rates stood at 19 per cent in March and highest at 28 per cent for direct home purchase, construction finance and land purchase loans.

The lenders say rates are expected to come down only when inflation is fully contained. "We may adjust the rates as soon as the CBR is adjusted downwards to avoid doing so prematurely," said Joram Kiarie, divisional director KCB Mortgages, in an earlier briefing.