Seven lenders line up for home loans from State agency


Kenya Mortgage Refinance Company (KMRC) chief executive officer Johnston Oltetia. PHOTO | DIANA NGILA | NMG

Seven more lenders, including three commercial banks, have joined the queue for refinancing of home loans under the state-backed plan which seeks to increase house ownership amongst workers earning less than Sh150,000 a month.

The Kenya Mortgage Refinancing Company (KMRC) has said Co-operative Bank, NCBA and bottom-tier Credit Bank as well as four SACCOs have this financial year applied for the loans.

They have joined four others which benefitted from Sh2.76 billion that KMRC advanced last financial year to cover about 1,400 mortgages. The four are KCB Group (Sh2.14 billion), HFC (Sh515 million), Stima Sacco (Sh69 million) and Tower Sacco (Sh30 million).

Chief executive Johnson Oltetia said the mortgage refinance firm was processing Sh6.2 billion loans to cover about 4,000 mortgages from the 11 lenders.

“The focus of KMRC is to help drive down the interest rates so that we have low rates and longer tenures. KMRC is seeking to provide funding with a tenure of 20 to 25 years,” Mr Oltetia said.

“We expect over time that the duration under which an individual will repay a (home) loan will increase from an average of 11 years to potentially 20-25 years — and that’s a very important affordability aspect.”

KMRC, a joint venture between the Treasury and private lenders, was formed to derisk home loans for workers earning up to Sh150,000 a month as part of President Uhuru Kenyatta’s underperforming plan targeting to put up 500,000 houses in five years through 2022.

Average mortgage size last year increased to Sh8.6 million from Sh8.5 million, the Central Bank of Kenya data shows, locking out low to mid-income workers from a market of 26,971 loan accounts worth Sh232.7 billion.

The mortgage refinance firm, which got permit to formally start operations in September 2020, 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 average market rate of 12.1 percent as of September 2021.

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