BY MWAKERA MWAJEFA and PSCU
Mortgage refinance company has been set up to boost the government’s affordable housing agenda with the sole function to provide long-term loans to primary mortgage lenders.
This company, Kenya Mortgage Refinance (KMRC), launched by President Uhuru Kenyatta on May 22, will provide cheaper funding from mortgage providers including banks, microfinance banks and Saccos.
KMRC, which starts operations with an initial capital base of Sh35 billion, is incorporated as a non-deposit taking financial institution under the supervision of the Central Bank of Kenya.
Its role will be to source loans from big investors and multilateral lenders and act as a pool from which mortgage lenders in the country can draw from at affordable rates.
The initial loans to kick-start KMRC were provided by the World Bank (Sh25 billion) and the African Development Bank (Sh10 billion).
Speaking during its launch, President Kenyatta said the initiative is a partnership between the Government and the private sector indicating a growing synergy between them towards the delivery of public goods.
“As we continue to experience the dividends of our growing population, the housing supply has, over the years, not kept pace with the concurrent growth in the demand for houses. As a result, this has led to a huge housing deficit, particularly for the lower income households,” he at the Windsor Country Club.
According to him the uptake of housing mortgages in Kenya remains below its potential with the Central Bank of Kenya statistics showing that the total outstanding mortgage debt in 2017 stood at about Sh223 billion.
This represents only about 2.74 per cent of GDP, which clearly shows that the housing mortgage business in Kenya is still very small.
South Africa, as an example, boasts of a mortgage sector accounting for 31 per cent of its GDP, the President noted.
“We expect the refinance company to significantly contribute to the development of the housing finance market in Kenya and help reverse the low mortgage penetration, by increasing the number of mortgages from the current 26,000 to over 60,000 by the year 2022,” he said.
The affordable housing loans refinancing will be capped at Sh4 million and Sh3 million in Nairobi and the rest of the country respectively. Refinancing for market housing loans will be issued at market rates.
At the same time, the President made impromptu inspection of housing and infrastructure projects in Nairobi.
He visited the Parkroad Estate in Ngara where the government is building 1,370 houses with the first phase of 228 units expected to be ready by September this year.
The housing project is part of its plan to construct 500,000 affordable housing units by 2022 under the Housing Pillar of the Big 4 Agenda.
Saying the project will be used as pilot, President Kenyatta added that it will be replicated in other towns like Mombasa, Kisumu and Eldoret.
Apart from this, the President inspected the ongoing construction of the Waiyaki Way-Red Hill link road and several other roads that are under construction including the second phase of Ngong Road dualling.
While addressing workers at the housing project, President Kenyatta encouraged them to ensure they enrol for Huduma Namba.
He instructed the Nairobi Regional Commissioner to ensure registration clerks are deployed to the construction site on Thursday (May 23) to ensure all the construction workers are registered.