Introduction
Have you been glued to the news, scrolling through TikTok, or chatting with that one friend who swears they're a real estate guru? If so, you’ve probably heard that mortgage interest rates and property prices in Kenya are on the rise—which is absolutely true.
If you’ve been thinking about buying a home or saving up for a down payment, you're likely wondering: Should I buy a house now, or wait?
To help you make the best decision for yourself and your family, let's explore whether now is the right time to buy a house in Kenya or if it's better to wait.
The Waiting Dilemma: A Comedy of Errors
Imagine this: you're at a property auction in Nairobi, paddle in hand, heart racing. The auctioneer announces, "Going once, going twice," and just as you're about to raise your paddle, you think, "Maybe I should wait for lower interest rates." Fast forward a year later, and that same property is now significantly more expensive. Oops. It’s like missing the last piece of Nyama Choma, hoping for more to appear.
Why Waiting Might Not Be the Best Strategy
Rising Property Prices: Let's face it, property prices in Kenya have been on a steady climb for years. The average home price has increased substantially over the past decade. Even if interest rates drop, the cost of the property itself might outweigh any potential savings from a lower rate. It’s like waiting for a sale on winter jackets during the cold season—you might get a discount, but you’ll end up paying more when the season hits.
Missed Opportunities: Every moment you wait is a moment you're not building equity. That’s like waiting for the perfect wave while the ocean's offering plenty of great surf. Don’t miss out on the chance to start growing your investment now.
The Perfect Storm of Now: With current interest rates still relatively low and various loan options available, now could be the perfect storm for buying. Imagine telling your future self, "I bought my dream home in 2024, and it was the best decision I ever made." Feels good, right?
Should I Buy a House Now or Wait?
So, should you buy a house now? Well, it depends. But don’t worry—we’re not going to leave you with a vague answer! Here’s a breakdown of when you should wait to buy a house, and when to make the move.
When to Wait
You should wait to buy a house if you aren’t financially prepared for homeownership. No matter what the housing market is doing, buying a house is a bad idea if you don’t have your finances in order.
Specifically, you should wait on buying a house if . . .
You have existing debt. Focus on paying off all your consumer debt before you buy a house. Eliminating student loans, credit card payments, and car notes will give you more room in your budget—and that’s crucial for a homeowner.
You don’t have a full emergency fund. Saving up an emergency fund of 3–6 months of your typical expenses before you buy will determine whether a broken fridge or washing machine is a catastrophe or just an inconvenience.
You haven’t saved a strong down payment. If you’re a first-time home buyer, aim for a down payment of at least 10–20%. A larger down payment means lower monthly payments and avoiding private mortgage insurance (PMI), which can add to your monthly costs.
You can’t afford the house payment. Don’t buy a house if the monthly payment (including principal, interest, homeowners insurance, and any other fees) on a 15-year fixed-rate mortgage is more than 25% of your take-home pay. Any more, and you risk becoming house-poor.
We understand the strong desire to become a homeowner and start building equity. But if one or more of these points apply to you, focus on those areas first. Many have regretted buying a house without proper financial preparation, ending up with a significant, costly burden.
We want your home to be a blessing.
When to Buy
If you’ve checked all those boxes, then you’re ready to hire a real estate agent and start your home-buying journey! Waiting for better interest rates or more affordable home prices may seem tempting, but here’s why buying now is a smart move:
If interest rates continue to drop, property prices will likely rise. Many people have been unable to afford homes due to high interest rates, so they’ve been waiting. As rates drop, these buyers will enter the market, increasing demand and driving up prices.
You can always refinance later. Buy now, and if rates drop further, you can refinance to a lower rate. If you wait and prices go up, you miss out on today’s prices. Think of it this way: You date the interest rate, but marry the house.
Mortgage rates may be high now, but they’re starting to drop. If you buy now, you’ll likely get a better deal than you would have last year.
The Central Bank of Kenya is unpredictable. You can’t predict what the Central Bank will do with interest rates, which directly impact mortgage rates. It’s better to secure a good deal now than to gamble on future rates.
Overall, your decision to buy a house should be based on your financial readiness, not just market conditions.
Will Mortgage Rates Go Down in 2024?
Yes, mortgage rates are expected to decrease in 2024, and they’ve already started. The average rates for fixed-rate mortgages have been dropping since late 2023.
For example, the typical rate for a 30-year fixed-rate mortgage fell from 13.5% in October 2023 to 12.7% in May 2024. The rate for 15-year mortgages similarly decreased.
Keep in mind that even as mortgage rates continue to decline in 2024, the drop may not be drastic. Rates aren’t likely to return to the exceptionally low levels we saw a few years ago.
For instance, industry experts predict a drop of around half a percent by the end of the year. While a lower rate is nice, the savings might not be substantial enough to justify waiting, especially since you can refinance later.
Conclusion: The Time is Now
So, is now the right time to buy? In a word: yes. While waiting for lower interest rates might seem wise, rising property prices and the missed opportunity to start building equity are significant factors. By acting today, you're securing your future and investing in a home that will appreciate over time. Don’t let the fear of “what-ifs” hold you back. Embrace the excitement, laugh at the small stresses, and make a decision that you’ll look back on with pride and satisfaction. Happy home hunting!
