KBA CEO CHAT - Mortgages

CEO | Gregory Brackenridge, CfC Stanbic, CEO
MONTH | March 2014
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Good morning and welcome to the fourth and final chat of this quarters My Chat with a Bank CEO
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Today we will be focusing on mortgages and are honoured to have Gregorary Brackenridge joining us at 10am for a one hour chat session.
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If you missed the previous three chats you can see the full transcripts and podcast in the Archives page of this chat platform.
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Welcome Trixie and Andrew. We are looking forward to a good chat session this morning
Andrew Kyuvi
Thanks Admin, looking forward to 10 am
TRIXIE CHIBOLE
Thanks Admin
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Welcome Betty, just 15 minutes before we kick off. Thank you for logging on.
Betty Malesi
Thank you.
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Good morning Austin and Eva. Thank you for joining us.
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Welcome Nuru. Thank you for logging on
Eva Gachoki
Morning Admin, Looking forward to it
nuru mugambi
Thanks looking forward to today's chat...can't imagine we've been a month already
nuru mugambi
welcome all
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Welcome Timothy to this mornings chat
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Good morning Christine
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We are almost ready to begin so start preparing your questions!!
CHRISTINE VULIMU
Good morning .I am glad to be part of this.
minnie Kang'ethe
Good morning
Chat Admin
Allow me to welcome Mr Gregory Brackenridge to this weeks KBA CEO Chat Session focusing on the topic of mortgages.
Gregory Brackenridge
Good morning everybody...im looking forward to our chat
gulleid gulleid
gud morning sir welcome and thanks for ur time
Gregory Brackenridge
homeownership is the largest single investment that most of us will make....and it needs to be thought through carefully, which is why this forum is important both for banks and for potential home owners
Gregory Brackenridge
good morning gulleid...thanks for joining us
gulleid gulleid
thank you sir
Gregory Brackenridge
as we wait for questions to come in...allow me to give some thoughts about entering the property market for a first time buyer
minnie Kang'ethe
am a first time buyer and would like to know what factors i should consider first
Gregory Brackenridge
...typically your investment payback period takes a long time...so it takes a long time to realize the capital gain from the investment...so the earlier one starts to save towards investing in a home the better
Gregory Brackenridge
welcome minnie thanks for getting us started
Andrew Kyuvi
Which are Kenya's biggest Mortgages firms, by numbers. And just to confirm, why do the mortgage firms have to do with 10 - 15 yrs for values that can be re-payed in say 5yrs. To me the banks need assured cash deposits but its disadvantage.
EDMOND NGETICH
morning everyone
Gregory Brackenridge
...minnie i would like to encourage you to research and look at the location where you would like to reside...and make sure that you can afford to live there...and if not...have a savings plan that will reduce the amount you will have to borrow to live in that area...alternatively, look at other areas that do fit within your affordability criteria
Eva Gachoki
Hi Gregory, please also advise on the percentage of costs involved in regards to the stamp duty and legal fees.
gulleid gulleid
i would like to know as a muslim students how do this islamic banks offer mortgages loans as u know interest prohibited in islam
Eva Gachoki
Is it also possible to extend the adjustable rate mortagages period to more than 5 years or is that duration fixed?
Gregory Brackenridge
Andrew thank you for your comment...there are different options available in the market...you can choose a shorter period but you can also get a longer period of up to 20 years...
GEOFFREY NJUGUNA
Mortgage verse buying a plot and building on my own, which is cheaper?
minnie Kang'ethe
already done my research, would prefer in Nakuru..........kindly adress Geoffrey question............because it has been on my mind for a long time
Gregory Brackenridge
Eva tied to Minnie's question...there are other costs associated with home ownership, including stamp duty which varies between 2 to 4 per cent, depending on the location of the property...there are legal fees which are approximately 1.5 per cent of the total loan...and valuation fees which are tied to the value of the house..there is insurance and fees based on the financing institution...in some cases these fees can be included in the overall loan amount so that the cost is spread over the life of the mortgage, which is why people tend to take a longer term mortgage
Gregory Brackenridge
Gulleid some institutions do offer sharia compliant products and i would suggest you shop around and see which institution fits your needs...i would add that this is a growing area of specialization by banks in Kenya
Meredith Njenga
Hello Gregory, what are your thoughts ( advantages, disadvantages,impact) on use of pension mortgage schemes to increase home ownership in Kenya?
gulleid gulleid
if u say some instituitions it means sharia compliant products are limited in the markets and hence it means they are expensive?
Gregory Brackenridge
Eva...to answer your question on adjustable rate mortgages...the mortgage contract is a floating rate contract, in other words adjustable rate contract...but you can swap your floating rate obligation to a fixed rate obligation for different contract terms...therefore it is always advisable to have a discussion with your bank to find an option which suits your own particular circumstance
Eva Gachoki
Thanks Gregory for the clarifications
Gregory Brackenridge
Thanks Geoffrey....a mortgage can be used to buy a complete house or to buy a plot and to build...generally people prefer to buy land and build because they believe it is a cheaper option...it will always be up to the individual because some will put immediate fulfillment of their need ahead of the deferred cost of completing the property...in other words, some people would prefer to buy and live in the home immediately, versus spending time in a partially constructed house
Theodulus Otieno
Hi I am happy to join this discussion. My first question is whether there is an age limit to joining the mortgage market.
MONICA MAKAU
The mortgage industry has been extremely volatile in demand rather than supply. With the economy recovery each passing year and stable CBK rates atleast in Q1 2014, where would you predict the interest rates to range in 2014?
Gregory Brackenridge
Meredith...pension backed mortgages allow you to use up to 60 per cent of your accumulated pension to obtain a mortgage so it supports in meeting the deposit costs and the other associated costs I mentioned earlier...which makes it faster and accessible to build or buy the home...so what you are doing is swapping your pension investment for a home ownership investment...and this would be a personal decision based on your circumstances
Geoffrey Wagude
My Name is Geoffrey….I wanted to Acquire about Micro Business Loans What is the procedure and what are the Basic Requirements for the Loan Acquisition Am not a salaried employed but am running a company called Invex technologies Limited In which I want to facility and increase my Business Scope plan .Kindly Advice me as you May
Gregory Brackenridge
Theodulus an interesting question because it involves both extremes...youngest and oldest...in Kenya you need to be 18 years old to legally enter into a contract, including bank contracts. Generally the earlier you qualify for a mortgage the better.
Gregory Brackenridge
...to add to that, most banks would prefer you to have repayed your mortgage by the time you have reached retirement age, which is generally accepted to be around 60 years of age
Sophie Mukwana
Hi there, who qualifies for a mortgage? Can I as a self employed business owner qualify?
Chat Admin
Monica - The mortgage industry has been extremely volatile in demand rather than supply. With the economy recovery each passing year and stable CBK rates atleast in Q1 2014, where would you predict the interest rates to range in 2014?
Gregory Brackenridge
Monica forecasting rates is a tricky business! but...i do expect rates to be stable around current levels provided there is market stability meaning low and stable inflation, stable exchange rate, and a gradual growth of the overall economy.
Eva Gachoki
Whta are the requirements for one to qualify for a mortagage with CFC Stanbic?
Anne Kasimu
Can we have Mortages that are affordable to all
Gregory Brackenridge
Hi Sophie...nice to hear from you again...
Gregory Brackenridge
...anybody who can demonstrate predictable and stable earnings, and who has a good credit record will qualify for a mortgage
Sophie Mukwana
Hi Gregory, it was nice interacting with you this morning
GEOFFREY NJUGUNA
Mortagages are for chosen few, is it possible for banks to look for affordable morgages outside the cities where an ordinary mwananchi can afford?
Sophie Mukwana
So say I have a great credit score/record and I have stable earnings, can I negotiate my interest rate?
Wanjiru Njoroge
Morning Gregory, why is that banks do not inform the public regarding all the hidden charges when signing up for mortgages?
Jeff Murage
Hi. Please advise me since comparing the Mortgage Market In Kenya and other countries, I find that its difficult to have mortgage tenures for more than 8-10 years. This makes it terribly difficult to use the mortgage avenue to own houses/ property. Am i just mis-informed or what?
Gregory Brackenridge
Anne...this is a universal challenge because home ownership is something that we all aspire to...the reality is that affordability is the primary driver of access to housing...my advise is to think about starting small and trading up as and when your financial circumstances allow...for example for me i started off with a one bedroom, one bathroom unit and i have traded up since then
STELLA NDURURI
Morning soory i have joined the chat a bit late
STELLA NDURURI
What are the requirements to get a mortgage with you?
Gregory Brackenridge
Wanjiru thanks for your question...i dont believe that it is deliberate, but the new consumer protection act as well as the central bank have made it mandatory for banks to now do so...therefore customers are now being educated to ask about the total cost of credit which covers all costs associated with the loan
Ken Kobia
Hello Gregory, do mortgages have a grace period?
Chat Admin
GEOFFREY NJUGUNA - Mortagages are for chosen few, is it possible for banks to look for affordable morgages outside the cities where an ordinary mwananchi can afford?
Anne Kasimu
We have seen situations when you have a mortage when you are working .With the nature of jobs there is no Guarantee any more of permanent jobs .What is the fall back position of the person who has taken the Mortage loan ?
MONICA MAKAU
The Marriage Bill being deliberated on, how does it apply to home owners with single spouse and multiple spouses?
Gregory Brackenridge
Geoffery...mortgages are available wherever the title is certain, so you could get a mortgage in any area in Kenya where there is certainty of title...obviously the challenges in the lands office are a real issue for all of us and we hope they will be addressed
Gregory Brackenridge
Monica currently you are required to get spousal consent on the mortgage application...when the bill passes through we will be guided by the Government on the law's application
Ken Kobia
If you have a mortgage, are there any penalty charges if you prepay or refinance? Also I’ve seen that when interest rate rise some mortgages have their rates increased, is this the case also when interests fall and how is the increase or decrease determined?
Abraham Kiptum
Why is it that the mortage Interest rates in Kenya is still high yet mortage loans is among the most secure loans in the market ? What is the current average interest rate offered by banks on mortgage Loans
Gregory Brackenridge
Anne...this is a challenge for all lending. there are insurance products available to cushion people for a period of time to allow them to get another job...but you also always have the option to approach your bank and reschedule your repayment...and you should do this as soon as you know your circumstances have changed or will change....i think generally most financial advisers would suggest that you save a sufficient amount of money to cover 3 months expenditure as emergency funding and this would assist
Gregory Brackenridge
...the good advise for anybody is save, always have enough money to cover 3 months of your expenditure which include your debt obligations
Chat Admin
Sophie Mukwana - So say I have a great credit score/record and I have stable earnings, can I negotiate my interest rate?
Gregory Brackenridge
sophie, absolutely...
Karuga Edwin
Good Morning Gregory, I'm the founder of a real estate web platform (www.movingout.co.ke) I have a vision of revolutionising the way people buy and sell homes in Kenya by encouraging more developers and professional agents to provide sufficient information about properties available in the market. I believe banks such as CFC Stanbic should step it up to educate more people about Mortgages to curb the problem "Mortgages are for a selected few" and embrace home ownership.
Ken Kobia
When you take a loan/mortgage there are usually insurance fees which are supposed to protect the bank against defaults. Why is it then that when one defaults you still go after their property?
Gregory Brackenridge
hi Abraham...good point...the cost of mortgages is heavily influenced by the price banks have to pay for long term funding...for example if a bank has to issue a 10 year bond, to finance a portfolio of mortgages, it will pay 1.5 per cent more than the government will pay for the same money, so the mortgage has to cost more than that to give the bank a return...so if the t-bill rate is 10 per cent, then banks would pay 11.5 per cent minimum...for the money, and they will add on a margin to cover costs, and make a return...to answer your other question, the current average rate is approximately 15 to 16 per cent
Gregory Brackenridge
Karuga...i congratulate you for playing a role in making information available and demystifying mortgages...today's platform is hopefully also doing just that...banks are continually engaging with their customers to create greater awareness
Chat Admin
Ken Kobia - If you have a mortgage, are there any penalty charges if you prepay or refinance? Also I’ve seen that when interest rate rise some mortgages have their rates increased, is this the case also when interests fall and how is the increase or decrease determined?
Abraham Kiptum
Is there a relationship between the repayment period versus the interest rate such that the longer the period the higher the interest rate ?
Gregory Brackenridge
Ken...generally there are no penalty charges for early repayment...some institutions may levy a charge to refinance once you have prepaid...so if you want to redraw the facility, there may be some costs
TIMOTHY SANDE
Thanks very much Gregory. Indeed the question on the rate of mortgages has been lingering in my mind for long. The response to Abraham is satisfactory.
Gregory Brackenridge
Thank you Timothy
Chat Admin
Eva Gachoha - Whta are the requirements for one to qualify for a mortagage with CFC Stanbic?
Ken Kobia
Does CFC offer construction loans, if yes, is it possible to use land as my equity contribution?
Gregory Brackenridge
Thank you for joining us Eva...we have covered this earlier in the discussion...to recap quickly...banks need to understand your source of income, be it a salary or business related, banks look for stable and predictable earnings; we also mentioned that you need to have a good credit track record. There are other requirements and we encourage you to contact us directly to see how we can help.
Chat Admin
We are about to wrap up...
Eva Gachoki
Thank you Gregory
Gregory Brackenridge
Ken, its a good question, any collateral can be used as a equity contribution and it differs from bank to bank so we encourage you to shop around
Gregory Brackenridge
Thank you Eva
minnie Kang'ethe
the conversation very helpful. Thankyou Gregory
Ken Kobia
Thank you Gregory.
CHRISTINE VULIMU
Thank you .This was very helpful.
Peter Ngugi
Thanks Greg for demystifying that belief that mortgages are for the chosen few. The char
Gregory Brackenridge
Thank you all for taking time out to participate in this Chat...it has been an interesting and insightful discussion. I hope this platform has been able to enlighten you on the topic of home ownership and mortgages...my advise is to start small and trade up as and when your circumstances change. I wish you all the best. and I look forward to seeing you in a CfC Stanbic branch.
Noureen Thogori
The conversation was Very Helpful and encouraging esp. the starting small and you gave a personal example -thank you Greg!
Peter Ngugi
The chat was very helpful
Betty Malesi
Very informative. Thank you
Chat Admin
Thank you all for taking the time to be with us this morning and for all the questions that have been posted. We will be posting the transcript and podcast uploaded shortly.
Judith Njugi
Thanks Gregory, the chat was helpful
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This concludes this quarters chat session. Stay tuned for the next quarters exciting line up where we tackle the drivers of the economy such as Oil & Gas and Agri Industry.
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Thank you Gregory for your time and have a great day.
Thomas Ndiritu
Asante Greg for clearing the air on this very important subject.
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Greg has now logged off but thank you Thomas for your feedback.
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Charles Ndungu
how could we streamline the mortgages to be attractive like in developed Countries??? and could you please clarify the mortgage in the US as compared to the one in Kenya. Thanks in advance
Andrew Kyuvi
Gregory, great answers