KMRC grows cheap home loans four-fold to Sh6.8bn

Kenya Mortgage Refinance Company (KMRC) Chief Executive Officer Johnstone Oltetia. FILE PHOTO | JEFF ANGOTE | NMG

The Kenya Mortgage Refinancing Company (KMRC) recorded a fourfold jump in its loan book to Sh6.8 billion in the year to December 2022, pointing to the corporation’s increased capacity to finance cheap homes after locking in additional capital.

The jump in disbursements, which stood at Sh1.3 billion at the end of 2021, has seen KMRC’s asset size expand to Sh21.4 billion from Sh9.8 billion previously.

The refinancer disburses loans to primary lenders such as banks in form of long-term funds, with the goal of unlocking affordable home loans for Kenyans.

In the period, KMRC borrowings more than doubled to Sh16.8 billion from Sh6.8 billion previously, improving the mortgage refinance firm’s capital base to meet the demand for loans by primary mortgage lenders.

The new borrowings include a Sh1.4 billion corporate bond raised in February last year which served to diversify KMRC’s funding base away from equity financing.

Established in 2018, KMRC represents a public-private partnership in which the government owns a 25 percent stake with private sector players holding the balance of 75 percent.

Among the institution’s private sector shareholders are banks and saving cooperatives including Absa Bank Kenya, Co-operative Bank, Harambee Sacco, KCBA, NCBA and Stima Sacco.

Banks hold the largest stake in the refinancer at 44 percent with Sacco’s stake at eight percent, while development finance institutions including the International Finance Corporation and Shelter Afrique own a 23 percent stake.

Other investors in KMRC include the World Bank and the African Development Bank in the form of subordinated debt and credit debt through the National Treasury.

Earlier this year, KMRC doubled the size of the subsidised home loan to Sh8 million in the Nairobi Metropolitan Area after factoring in the rising cost of buying houses.

The size of mortgages for the rest of the country was meanwhile raised to Sh6 million from Sh3 million previously.

The company further raised the allocation of the value of the purchased home to 105 percent from 90 percent negating the need for upfront payment.

KMRC-backed home loans continue to offer single-digit interest rates with longer-repayment periods of up to 25 years.

On Thursday, KMRC disclosed it had made a net profit of Sh321.4 million in 12 months of operations to December 2022 from Sh196.6 million previously.

The growth in net income for the refinancer is largely attributable to a 43.6 percent jump in net interest income in the period.

Besides making loan disbursements towards affordable home ownership, KMRC holds investments in Treasury bonds and cash and near-cash equivalents.

The operations of KMRC are expected to remain grounded on the government’s affordable housing agenda which has been retained under the new administration.

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