Wednesday, 16 November 2011 00:20 BY JAMES WAITHAKA

Kenya’s property market is likely to remain stable despite recent turmoils in the banking industry, sector players say. Huge hikes in lending rates have caught borrowers unawares, forcing most to request extension of tenures on their loans to suit disposable incomes. A rise in default is however expected if adjustable rates remain high.

“If these rates continue to spike, we should brace ourselves for more default cases. A few lucky ones will be those who have fixed mortgage rates as opposed to adjustable mortgage rates,” said Bernard Ochieng, agency manager at Crystal Valuers Ltd.

The Hass Property Index for third quarter 2011 said tenants are already moving down the accommodation ladder in rentals, although asking prices for homes saw a slight increase of 0.8 per cent in the three months.

KCB mortgage director Joram Kiarie said going forward more people will go for cheaper properties away from locations preferred earlier as interest rate “increments on rates are fairly significant.” “For those who ‘must’ stay in up-market areas like Kileleshwa, we are likely to see some postponing decisions to buy for while, say for the next 15 months or so,” he said.

Caroline Kariuki, managing director of mortgage brokerage firm TMC Africa, said focus should now be on how people can save their homes amid the high interest rates. The firm acts as an intermediary and negotiates mortgage products with financiers on behalf of home builders and buyers.

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