Kenyans who earn Sh150,000 per month and below will from September be eligible to apply for mortgages from local banks and saccos at an annual subsidised interest of 7 pc, nearly half the prevailing market rates.
The rates reducing is due to the newly established Kenya Mortgage Refinance Company (KMRC), a Treasury-backed lender, which is offering banks and saccos cash for onward lending to households.
KMRC majority share is held by the government with 25pc, with the rest of the shares held by banks, SACCOs, and microfinance institutions.
The KMRC will lend money to financial institutions at an annual interest of only 5pc, enabling them to write home loans at 7pc which is almost 50pc lower than average market rate of 11.95pc
“The CBK has approved the KMRC to operate as a mortgage refinancing institution in principle but the only thing that remains is to have a licence,” said The chief executive of KMRC, Johnstone Oltetia.
Mr. Oltetia says the refinancing firm expects to start lending before the end of the third quarter, which closes on September 30th.
So far, KMRC has mobilized nearly Sh40 billion, including Sh2.2 billion in equity capital, Sh25 billion injected by the World Bank, and Sh10 billion from the African Development Bank. it is also expecting an extra Sh5 billion from the capital markets.
The funding is expected to drive up the mortgage penetration rate which at the moment stands at only 2.7pc of the GDP, compared to South Africa’s mortgage industry that makes up 31pc of the GDP.
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