Kenyans to start accessing cheaper home loans

The Kenya Mortgage Refinance Company (KMRC), a Treasury-backed lender, which offers banks and Saccos cash for onward lending to households, will start advancing loans at the end of this month.

The institution chief executive Johnstone Oltetia confirmed that shareholders will be advanced at five per cent to enable them advance to their customers at higher rates but lower compared to 12 per cent of the current market mortgage rates.

“Since inception, we have been building financing to meet the market demands of providing loans to partners and customers to enable them to acquire affordable housing at cheap rates. We will announce the first lending by the end of September,” said Mr. Oltetia.

The lender he confirmed has so far recruited 20 Primary Mortgage Lenders (PMLs), Cooperative Bank, DTB, HF Group, NCBA, Absa Kenya, Stanbic and Credit Bank, International Finance Corporation (IFC) and Housing in Africa (Shelter Afrique).

Kenya Women Microfinance Bank (KWFT) is the sole MFB (Micro Finance Bank) shareholder while SACCO shareholders include Kenya Police, Mwalimu National, Safaricom, Ukulima, Bingwa, Imarisha, Unaitas, Imarika, Tower, Stima and Harambee.

Speaking during the launch of new mortgage products of Ukulima Sacco at a Nairobi hotel, Oltetia stated that his institution is committed to join efforts to reduce the huge housing supply gap and thus enable Kenyans to own homes.
UKulima Sacco chairman Philip Cherono said the developed mortgage product was recently approved by Sacco Societies Authority (SASRA).

“The SACCOs continue to play an important role in the realisation of housing and in mobilising funds for the purchase of land to put up housing besides raising capital for housing development. As you are aware, the Kenyan SACCO sector is the largest in Africa and is globally ranked at the seventh position according to the SASRA Financial report 2019. This put us in a better position to lend to Kenyans at affordable interest rates nearly half the current market rates,” he stated.

He added, “Prospective buyers will qualify for mortgages of up to Sh8 million with a repayment period of up to 20 years. We are very happy today that Ukulima Sacco is part of this great and noble initiative and the partnership with KMRC supports our mission of enhancing members’ empowerment through the provision of quality financial services, in providing long-term funding and reducing our reliance on short-term loans. The funding is expected to drive the number of mortgage accounts to an estimated 2,000 in the first year and by 4,000   by the year 2022,” said Mr. Cherono.

The Sacco CEO Richard Nyaanga said the newly launched mortgage product is a game-changer and thus will help in quenching the thirst of the majority of Kenyans who are in dire need of owning a home.

“We are well aware of the current, social and economic difficulties particularly to our sector and this will mean that we need to get extra creative and aggressive business ideas,” said Mr. Nyaanga.

According to state department of housing, there is already a backlog of two million housing units, and the accumulation increases by 150,000 units every year due to several factors including the limited availability of mortgage finance and development finance.

The Sacco also launched Cardless transactions together with PESALINK by Family bank and instant ATM Card printing by Co-operative bank.

KMRC, Oltetia confirmed has so far mobilised nearly Sh40 billion, including Sh2.2 billion in equity capital, Sh25 billion committed by the World Bank and Sh10 billion from African Development Bank (AfDB).

“Further we have plans to raise an extra Sh5 billion through the issuance of a green bond in the capital markets next year as well as exploring other local and international sources. Adequate funding will enable us to increase mortgage accounts in the country by 130.7 per cent from the current 26,504 mortgage accounts to 60,000 loan accounts by 2022,” he added.

According to Central Bank of Kenya (CBK) data Commercial banks in Kenya had only 26,504 mortgage accounts in their books worth Sh224.8 billion as at the end of 2018.