KCB Group has become the eighth lender to get funds amounting to Sh1.8 billion for refinancing home loans under the state-backed plan which seeks to increase house ownership largely amongst workers earning less than Sh150,000 a month.
The Kenya Mortgage Refinancing Company (KMRC) said it has disbursed the funds to the country’s largest home loans financier by market share after several months of due diligence on mortgages to be funded.
KCB was amongst the first lenders to apply for funds from KMRC after it sought Sh2.1 billion early last year.
But other lenders like Co-op Bank and third-tier Credit Bank which applied later got funds ahead of the country’s largest home financier.
“The KCB mortgage portfolio was very large [and], therefore, the security registration process took long,” KMRC said in an emailed response to Business Daily.
The amount tapped by KCB from KMRC is the largest to a single financier for on-ward lending to homeowners and is 38.46 percent more than Sh1.34 billion advanced to seven lenders — three banks and four saccos — last year.
Co-op Bank, which accounted for 5.6 percent of the residential mortgages market last year, tapped what was previously the highest amount from KMRC at Sh550 million, followed by HFC Ltd (Sh515 million).
Others were Unaitas Sacco (Sh116 million), Stima Sacco (Sh69 million), Credit Bank (Sh52 million), Tower Sacco (Sh30 million) and Ukulima Sacco (Sh12 million).
The KMRC funding covered 574 loans priced at an average interest of 9.5 percent, putting the average mortgage size at Sh2.34 million.
The industry’s average mortgage size last year increased to Sh9.2 million from Sh8.5 million previously, the CBK data shows, locking out low- to mid-income workers from a market of 26,723 home loan accounts worth Sh232.7 billion.
The mortgage refinance firm offers funds to banks and Saccos for onward lending to homeowners at an annual interest of five percent. The recipient lenders are, in turn, expected to lend out the cash at a single-digit interest rate —a lower than the current average commercial market rate of 12.2 percent.
KMRC, which formally got an operating permit from the Central Bank of Kenya in September 2020, was formed to de-risk home loans for workers earning up to Sh150,000.
This is part of the government's plan which had ambitions of putting up 500,000 houses in five years through 2022.