I love Kenya, I really do – but occasionally I wish I lived in the States. Take for example a day like today when I decided to go mortgage shopping. A bright and warm Saturday it was (very odd for July) and I was in good spirits until I met the bankers. Boy was I in for a shock!!

Walk into Bank no. 1 – the rates were 12.9% and the lady at the branch informed me that the Central Bank had recently raised the Kenya Bank’s Reference Rate (KBRR) to 9.87% up from 8.54% (see report here) which means, she said, “this may affect the mortgage price in the next month or so ie. mortgage rates will rise again.”

Now, you may not see the significance in the rate changing by almost 1.5% so let me put this into perspective.

The difference in monthly pay-outs is 11,242. With just one announcement, the Central Bank could impact your life and change your disposable income by a whooping 11K.

Walked into Bank no. 2 and the story got gloomier. Their rates were 16% – yeah that’s right 16%. Please note I am talking about a mortgage and not a personal unsecured loan. I mean really??? 16%? A mortgage is a secured loan and secured by an asset that has significant capital gains so why wouldn’t the Banks opt to lower the mortgage rates?

The other day I spotted a low income housing project in Athi River where the apartments were selling for Kes. 5 million (approx. 50,000 USD). Now, I don’t know about you but that does not sound low income at all. Think about it, given the mortgage rates in Kenya, you would have to be earning a net income of at least Kes. 100,000 a month and be free of other financial commitments to quality for a Kes. 5 million loan. How then is that a low income house?

According to an article written by the Financial Times late last year, Kenya’s mortgage penetration stands at a paltry 0.0004% as we only have 20,000 mortgages for a population of 44million plus people. I don’t know about you but that is just wrong. We need to have our mortgage rates lowered to single digits to allow more people to access mortgages and own homes.  We need to join the ranks of the USA and UK where the mortgage rates range from 3% to 5%.

In my view, mortgages in Kenya are a preserve for the RICH, THE BANKERS (who can borrow at 5%) and THE CIVIL SERVANTS (who can borrow from as low as 3%). If you were wondering why bankers rarely change industries now you know….it’s the mortgages that keep them in.

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