The Kenya Mortgage Refinancing Company projects funding towards the purchase of affordable houses to grow nearly five-fold this year in a boost to low- and mid-income workers long locked out of home loans.
The firm, 25.3 percent owned by the State, expects to have disbursed at least Sh7.7 billion to banks and saccos by December for onward lending to prospective home buyers.
That will be a 479.85 percent climb over Sh1.34 billion advanced to seven lenders — three banks and four saccos — last year.
The mortgage refinance firm was formally licensed in September 2020 to derisk access to home loans for workers earning up to Sh150,000 a month.
This is part of President Uhuru Kenyatta’s underperforming project which had targeted to put up 500,000 houses in five years through 2022.
The company — a joint venture between the Treasury and lenders like banks, saccos, and development finance institutions — offers funds to mortgage financiers for onward lending at an annual interest of five percent.
The recipient banks and saccos are, in turn, expected to lend out the cash to home buyers for single-digit interest rates.
“It [mortgage market] is exclusionary because they have been focusing on the upper market income segment and that exclude the mid- and low-income segment,” KMRC chief executive Johnson Oltetia told the Business Daily in an interview in February. “They have mostly been focusing on short-term loans, and that’s the situation we want to change.”
The industry’s average mortgage size last year increased to Sh9.2 billion from Sh8.5 million in 2020, the Central Bank of Kenya data shows. This effectively locked out low- to mid-income workers from the thin mortgage market of 26,723 home loan accounts worth Sh232.7 billion in 2021.
KMRC says its funding last year covered 574 home loans priced at an average interest rate of 9.5 percent, putting the average mortgage size at Sh2.34 million.
Since the start of the year, the mortgage refinancier has closed deals worth Sh2.57 billion and “is currently working on a pipeline of Sh5.2 billion”.
KCB Group, the country’s largest mortgage lender by market share, accounted for 70 percent, or Sh1.8 billion, of the cash already disbursed by June.
Prospective home buyers, who qualify for home loans under the KMRC framework, access up to Sh4 million for property in Nairobi metropolitan area and Sh3 million elsewhere, with a repayment period of up to 20 years.