Capital Markets

Stanbic Bank joins group lending home-buying funds under KMRC

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Stanbic Bank branch on Kimathi Street Nairobi on Sunday, April 4, 2021. PHOTO | DENNIS ONSONGO | NMG

Stanbic Bank Kenya has joined the stable of lenders rolling out home loans backed by the Kenya Mortgage Refinance Company (KMRC), signing agreements with three developers to fund mortgages for home buyers.

The lender said that it is partnering with Superior Homes Kenya, Avic International Real Estate and Safaricom Staff Pension Scheme Registered Trustees in the plan, where it will be pricing mortgages at rates of up to 9.5 percent with a tenor of up to 25 years.

In addition, the bank will offer mortgage financing of up to 105 percent loan in both local and foreign currencies, allowing its clients to tap into vacant land and construction financing.

“Our three additions to our partners portfolio further strengthens our ability to provide our customers with a wide range of properties to choose from in their journey to make their dream of owning a home a reality,” said Stanbic Bank's head of client solutions Anjali Harkoo.

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 former President Uhuru Kenyatta’s plan targeting to put up 500,000 houses in five years through 2022.

The firm provides funds to mortgage financiers for onward lending at an annual interest of five percent, allowing them to roll out home loans at single-digit interest rates.

By May this year, KMRC had disbursed a total of Sh3.87 billion to mortgage lenders and has been targeting to issue an additional Sh5.2 billion by the end of the year.

Kenya’s mortgage market over the years has suffered due to high and variable interest rates, partly due to the high cost of funds for lenders and the short-term nature of deposits discouraging more loans being rolled out.

The average mortgage size last year increased to Sh9.2 million from Sh8.6 million in 2020, Central Bank of Kenya data shows, locking out low to mid-income workers from a market of 26,723 loan accounts worth Sh245.1 billion.

Economic survey data shows that affordable houses that were built by State Department for Housing increased from 338 units in 2020 to 431 units last year.

The new units of affordable houses that were constructed last year now bring to 2,613 units that have been set up by the State since 2017. However, there were 3,480 low-cost houses under construction by State as of December 2021 for Sh6.9 billion.

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