Deposit taking microfinance institution Rafiki has embarked on mortgage lending targeted for low-income earners and individuals in the informal sector. The company has said it plans to commit 25% of its loan book to home loans. Rafiki plans to roll out home loans of between Ksh1 million to Ksh3 million payable over a 10-year period.
Home ownership for low income earners has for a long time been an impossible idea to hatch as big lenders in the industry did not create products that this group of people could afford. But as Daniel Mavindu, the managing director of Rafiki says, low income earners and informal sector workers form the biggest homes market and therefore to address the issue of housing needs, formulating low cost home products is a viable strategy.
The cheapest house in the Rafiki arrangement would attract a monthly mortgage of about Sh19,000 for ten year period, which will amount to about Ksh. 2.3 million. The mortgages attract an 18% interest on variable interest rate schedule.Rafiki says it will finance 100% of the construction costs for loan applicants with land titles, and 70% of the cost of land for people who do not have land.
Earlier this year, Jamii Bora Makao Limited launched a new housing estate, Kisaju (View Park Estate) located in Kitengela with the completed project envisioning 750 low cost homes. The prices range from Kshs. 1.5 million for a “standard house” of 90m2 to Kshs. 5.5 million for a “deluxe house” of 144m2 with financing available through Jamii Bora Bank and Housing Finance.