Housing Finance Ltd. (HFCL), Kenya’s only publicly traded mortgage lender, dropped the most in more than a month on concern that new mortgage uptake could be crimped by high interest rates.
The stock fell 3.8 percent to 15.20 shillings at the close in Nairobi, the capital, the biggest decline since March 19, according to data compiled by Bloomberg.
Kenya’s mortgage market in 2012 will be “dampened” by an increase in interest rates, higher cost of building materials and borrowers postponing investment decisions to await the outcome of general elections next year, the Central Bank of Kenya said in a report dated May 25. Housing Finance said April 24 first-quarter sales dropped 38 percent as higher interest rates affected mortgage uptake.
“Mortgage take up has been choked up by the high interest rates regime and in part investors are worried about the health of not only new mortgages but also lending to the construction sector, which Housing Finance is now involved in,” Aly-Khan Satchu, chief executive officer of Nairobi-based Rich Management, said in a phone interview today.
Earlier this month the company announced plans to begin construction of houses for sale after a 13-year break. Through its unit, Kenya Building Society, it will begin by putting up 162 maisonettes in Komarock, a residential estate in Nairobi, it said on its website.
In December Housing Finance raised its base lending rate to 23 percent for new customers, while existing customers will pay 16.5 percent, up from 14 percent. The increase came a day after Kenya’s central bank raised its benchmark interest rate for a fourth consecutive time by 1.5 percentage points to 18 percent on Dec. 1.
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