Housing Finance has reported a net profit of KES 250.3 million in the second quarter of the period ending June 30th. The  3.5% growth from the previous years' same period results where the company posted KES 41.8 million is the slowest growth since 2008 when the mortgage lender's half-year net profit dropped by 5.5% to KES41 million.

The slow performance was due to the cost of funds, according to the press release. Interest on customer deposits increased by 260% to KES 1.1 billion up from KES 312 million in 2011. The interest on customer deposits, which currently stands at KES 21.9 billion, averaged 11.8% in 2012 up from 4.5% in 2011.  Housing Finance Managing Director, Mr. Frank Ireri said the reduction in the Central Bank Rate (CBR) will help the financier reduce the cost on corporate deposits.

Reduced mortgage sales have also contributed to the low growth rate. New home loans in the six months ended June 2012 stood at  KES 2.2 billion compared to KES 3.7 billion the previous period. The mortgage financier says a strategic move to protect existing customers by  adjusting its lending rate by 2.5% to 16.5% has continued to impact positively on its loan book.