The bank has now become a property speculator rather than a keeper of your deposits.
Not clever banking and is a big part of the why the West has just had a huge credit crisis.
Hope Ndu'ng'u at CBK will slow down his policy of being supportive of the banking sector and "take away the punch bowl" (to quote Mervyn King) before banks/Kenyan economy binges on lofty credit.
3 comments:
Fingers crossed.
your argument is flawed. The latest report on mortgages indicate only 20,000 mortgages in the country. That means that majority of Kenyans have acquired their real estate cash. Mortgages have not started to be repackaged in Kenya, so the banks are assuming the risk (not passing it on to other investor - MBS etc)
Real estate prices are ridiculously high but I do not think there is a bubble.
A good case scenario why inflated prices will not come down anytime soon is: If you purchased your piece of land for Ksh 5M and the economy is tough you will most likely not sell that piece of land for anything less than Ksh 5m. The fact that most Kenyans own the Real Estate outright reduces the possibility of a bubble.
I like this post short but meaningful and helpful. thanks for sharing and i'm looking forward to you next post.
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