Companies

Harambee Sacco now offers subsidised mortgage in State-backed plan

harambee-sacco

Nairobi Metropolitan Service (NMS) Major General Mohammed Badi(left), Harambee Sacco Vice-Chair Beldina Oguya (centre) and Harambee Sacco Chairman Macloud Malonza cut a cake during the launch of two new mortgage schemes at Serena Hotel in Nairobi. PHOTO | EVANS HABIL | NMG

Harambee Sacco Monday became the first lender to offer mortgages at an annual subsidised interest of seven percent under a plan supported by a State-backed home loans refinancing plan.

This is after newly established Kenya Mortgage Refinance Company (KMRC) approved the sacco’s two mortgage products, Harambee Home loan that enables its members to purchase readily built houses and Harambee Jenga loan, where borrowers are facilitated to build a house on their own parcels of land.

The two loans are pegged at eight percent interest rate for the 10-year mortgages and at nine percent for over 10 years and upto 25 year mortgages.

The lower home loan rates are the product of KMRC, a Treasury-backed lender, which offers banks and saccos cash for onward lending to households.

KMRC chief executive Johnson Oltetia said Harambee Sacco which contributed Sh25 million for a stake in KMRC, together with 10 others were legible for the mortgage re-finance facility owing to their shareholding.

“We have a ready Sh4.5 billion mortgage portfolio that our shareholders can tap into for onward lending to Kenyans and a further Sh25 billion loan facility from the World Bank that we can readily access. Africa Development Bank has committed Sh10 billion,” he said.

Harambee Sacco chairman Macloud Malonza said they will cash in on their rich land bank to promote their two products where each beneficiary will be expected to pay a 10 percent deposit for a mortgage starting at Sh500,000 to a maximum of Sh4 million.

Each mortgage is pegged at member’s age until retirement at 60 years or 25 years’ repayment period where Jenga loans will be based on a drawdown basis based on stage by stage arrangement during construction.

This means individuals who qualify for the subsidised loans or those earning less than Sh150,000, will have to top up their loans with commercial credit should they seek a home above the Sh4 million.

KMRC will lend to banks and financial co-operatives at an annual interest of five percent, enabling them to write home loans at between seven to nine percent-lower than average market rate of 11.94 percent or 42 percent cheaper.

Mr Oltetia said buyers seeking loans for houses valued above Sh4 million, will negotiate for top-up loans with participating lenders. The additional funding will be at market rates.

The government owns a 25 percent stake in KMRC, with the rest of the shares held by banks, saccos and microfinance institutions.