Investors in Nakuru's real estate market now have more options for financing as more lenders set up shops in the town.
A spot-check by The Star shows there are at least 30 banking institutions, including micro-lenders, which are targeting both the formally and informally employed.
Land buyers, homes and office builders and buyers shopping for loans are now finding it a lot easier to compare available financing options and the associated costs as lenders flock the town.
Demand for land, residential houses, commercial and retail space is projected to rise as Nakuru county takes shape once its government is elected next month.
"This will create a need and real estate investors will seek more land within town and the outskirts to erect new buildings. The county government will need administrative offices as well accommodation facilities," said Peter Mburu, a real estate agent-cum-manager.
But despite the increasing number of lenders in the town, and reduction of the Central Bank Rate to 9.5 per cent last month, financiers are yet to switch to 'volume-focused' approach and lending rates have in effect remained unmoved.
"Before any real estate investor decides to borrow either for construction or plot purchase, they must consider all factors, implicit and explicit, including the interest rates, project costs, and economic viability of a loan," Mburu cautions.
Paul Njuguna, a loans adviser with Consolidated Bank's Nakuru branch, notes that most real estate borrowers are seeking construction financing.
The State-owned lender is financing up to 90 per cent of project costs for land purchase and up to 70 per cent for construction loans. The effective lending rate at the bank on top of the base lending rate is dependent on how much one is borrowing, according to Njuguna. The bank's base lending rate is currently pegged at 23 per cent.
Njuguna says a land buyer seeking financing must have identified a parcel within the municipality, which should not exceed an acre.
At Prime Bank branch, borrowers can get up to 75 per cent financing on project costs at a 17.5 per cent interest rate. The borrower must however must first operate an account with at least Sh250,000 for three months or more.
"We offer an attractive package for high-value construction projects," branch manager Maulish Achevya said.
Credit Bank, though without a specific mortgage loan, says it can finance land purchase or construction at a 19.75 per cent interest rate. The borrower must however raise 30-40 per cent of the total project costs.