The KMRC is expected to raise will raise cash from sources such as bonds to lend to banks and financial co-operatives using their mortgage loan contracts with customers as security.
Regulations guiding KMRC operations have also delayed as the Attorney General is yet to clear the rules for publication more than five months since they were put for public review.
A licence hitch has delayed the take-off of State-backed firm that was meant to boost the access to cheaper mortgage through making it easier for banks to access long-term finance for home loans.
Sources at the Treasury say the Central Bank of Kenya is yet to offer Kenya Mortgage Refinancing Company (KMRC) a licence, more than two months after President Uhuru Kenyatta launched the firm.
The KMRC is expected to raise will raise cash from sources such as bonds to lend to banks and financial co-operatives using their mortgage loan contracts with customers as security.
Regulations guiding KMRC operations have also delayed as the Attorney General is yet to clear the rules for publication more than five months since they were put for public review.
The mortgage company already has a $250 million (Sh25 billion) loan from the World Bank, and another $100.51 million (Sh10 billion) from the African Development Bank (AfDB) to kick off mortgage refinancing.
But the two lenders require proof of the CBK permit before allowing the use of the billions, which will lead to mortgage rates below market rate. “We have to show the World Bank and AfDB the regulations and CBK licence to be able to draw the funds,” said a Treasury official who asked not to be named, adding that they expect KMRC to start operations from September. The secondary mortgage lender, which is currently run by staff on secondment from the Treasury, has hired a consultant to recruit substantive managers for the available positions.
Kenya had just 26,187 mortgage loans valued at Sh22.2 billion in 2017or less than one percent of gross domestic product (GDP) in the year, compared with about 30 percent of GDP worth of outstanding mortgages in South Africa. Lenders usually shy away from writing housing loans mainly due to a lack of long-term deposits in the industry to match them.
The Treasury, which will follow Nigeria, Tanzania and Malaysia in establishing a mortgage refinancing firm, hopes the KMRC will help to tackle this problem through the provision of long-term funding to banks.
High-interest rates have also been blamed for keeping mortgages out of the reach of many people. The KMRC targets to lend at below 10 per cent.
The non-deposit taking KMRC, is 80 percent owned by banks and saccos, and the rest is held by the State, which aims to provide 500,000 houses in five years.
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