Capital Markets

HF secures Sh475m from mortgage refinance company for lending


KMRC chief executive Johnstone Oltetia. PHOTO | DIANA NGILA | NMG

Kenya Mortgage Refinance Company (KMRC) has lent Sh474.9 million to mortgage financier HF for onward lending to home buyers, according to disclosures in the latter’s 2021 annual report.

HF is among the financial institutions to disclose they have received funding from KMRC which was established to catalyse the growth of home ownership in the country.

HF took the KMRC loan at an interest rate of 5.15 percent per annum. The credit facility is due to mature on December 23, 2028. Other institutions that have taken loans from KMRC, which is owned by the National Treasury and private firms, include Co-op Bank which drew down Sh549.8 million last year.

KMRC is lending the money to banks, saccos, and microfinance firms at an interest rate of five percent per annum, allowing them to on-lend the same at single-digit rates to mortgage customers earning less than Sh150,000 per month.

In total, there were a total of 26,971 mortgage loans in issue in Kenya by 2020, worth Sh232.7 billion. The average home loan size stood at Sh8.6 million, with an average rate of 10.9 percent on the loans and a time to maturity of 11 years.

This relatively high rate and the mismatch between banks’ largely short-term deposits and the long-term commitment of mortgage financing has been blamed for the low uptake and disbursal of home loans.

KMRC was thus formed to feed the banks with long-term funding at five percent interest, which in turn allows them to commit to financing home buyers at friendlier rates and longer tenors.

The mortgage refinancer had by the end of last year accessed Sh6.5 billion in capital for onward lending.

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