Rank: Chief Joined: 1/3/2007 Posts: 18,344 Location: Nairobi
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DBLyon wrote:VituVingiSana wrote:DBLyon wrote:Horton wrote:This story is too skewed to favour stocks
1. It assumes an extremely modest growth of 6.5% pa in the price of the apartment.
2. Shows that the apartment is currently yielding only 3% which part of nairobi is yielding this low?
As an example, a property I bought 4 years ago on mortgage from stanchart. Mortgage is at 10.9%, the property has doubled in value and it is now fetching an 11% yield. Therefore rent adequately covers mortgage. And you cant beat double value in 4 years. Agreed. I also think that a mortgage is not all bad if you are financially savvy. Especially if you get the right rate like 10.9% from Stanchart. The conditions were onerous for many Kenyans. Employment (salary) not business (business income). Limited amount was available for on-lending. Overall, I am not sure how much Stanchart gave out in mortgages. It did increase Stanchart's profile as a retail bank willing to lend to individuals.
A property I bought against many people's advice has literally tripled in value in 7 years. The rent pays the mortgage. The rent in that period has also increased significantly by 50%. And I have been able to take small loans against the increased value to do other things. A house is the easiest thing to use as security, at least in this country. Back then...In July 2016 Where can one get a mortgage at 11%? GoK is paying 13% on risk-free bonds. Which bank will lend at anything lower than 13%? After the price increase 2x for @Horton over 4 years and 3x for @DB in 7 years... will the trend continue? @VVS, Certainly, the rates are high now. The best commercial mortgage rate is still Stanchart at 14.9%.
Is it still available? What are the T&Cs?I still maintain that for a finsavvy person it still works. To hold down the price as you make money elsewhere aggressively to pay down the debt. Offplan buys etc. https://www.sc.com/ke/borrow/mortgages.html
As low as 14.9% which means the minimum of 14.9% but most would not get that. Once Oigara said KCB gives loans at 10%, when GoK was paying 14% on risk-free T-Bonds, Oigara glossed over was if these loans were subsidized by employers, DFIDs, in KES or USD, conditions that many would not meet, duration, commitment fees, etc The parents were paying a mortgage at twice the amount of rent the neighbours were paying back in the day. By the time I grew up the mortgage instalments were a fraction of the neighbours' rent. One sixth, approximately. Not to mention the value if one was to sell. Clearly I'm a believer.  Is that in Kenya? In some countries eg USA one can lock in interest rates for upto 30 years. After the 'goldenberg' era when GoK paid upto 80% pa, most banks stopped long-term fixed-rate loans. I could be wrong... Which banks offer long-term fixed rate [so 12% is 12% even after 5 years even if GoK was borrowing at 4% and now paying 13%]? Some banks give their employees loans at 6% while GoK has 3% loans. These are not for the rest of us. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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