Interest rate caps push groups to seek SACCO cash

Interest rate cuts are increasingly attracting groups to seek SACCO loans for construction of houses, especially in rural areas, according to real-estate players.
SACCOs have dropped rates to keep up with the banks, which have also largely kept off giving loans.
Koto Housing Company chief executive Moses Nderitu said several groups are holding talks with SACCOs with a view to building houses on members’ land.
“SACCOs are organising their members in groups of up to 200 members per trip to visit our Mlolongo plant to view sample houses and we are in talks with several societies for possible deals on the joint venture,” he said.
Property developer PRC’s general manager Abraham Murithi said most clients’ reliance on savings and SACCO loans to buy land for house construction means many developers are yet to feel the impact of capped interest, which has slowed down commercial banks credit issuance.
“Residential plots also remain an attractive security to banks that are readily willing to finance house construction as opposed to funding business ventures. We are keen on cashing in on this growing interest among Kenyans on affordable loans to provide them with affordable housing for the low-end market,” he said.
Last year, President Uhuru Kenyatta signed into law the Bill capping interest rate at 4 per cent above the Central Bank Rate which currently stands at 10.5 per cent. The president said banks should compete for customers with lower rates saying this would make credit accessible to many.

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