KMRC: Scaling up homeownership through affordable mortgage
The Kenya Mortgage Refinance Company PLC (KMRC) has continued to play a crucial role in ensuring that low-income citizens acquire homes through affordable financing.
KMRC Corporate Bond on the Nairobi Securities Exchange (NSE) was oversubscribed by 480 per cent, netting applications worth Ksh8.114 billion against a target of Ksh 1.4 billion. The firm said in a statement that the proceeds raised would enable it to blend its inventory of concessional funds and scale up operations as it seeks to continue to re-finance home loans and make them affordable and within reach for more Kenyans.
Mr Johnstone Oltetia, the company Chief Executive Officer, said the Corporate Bond was a strategic landmark issue, and investors’ response demonstrated a vote of confidence in the company’s strategic direction.
“The response to our inaugural bond issue demonstrates the market’s confidence in the KMRC’s model and strategy and is statement to the importance of the company’s mandate to increase home ownership and transform the country’s housing sector. Today, we firmly establish our entry into the local capital markets for the core purpose of sustainably raising long-term funding for the company’s operations,” Mr Oltetia stated, adding, “building a bankable and tenable long-term capital is at the core of our Strategic Plan and objective to make housing affordable for our people.”
Since it received its operating license from the Central Bank of Kenya (CBK) in September 2020, KMRC has relied exclusively on concessional funds from the World Bank and the African Development Bank (AfDB), the continental development finance institution (DFI), for long-term capital. KMRC has so far accessed Ksh6.5 billion from the two DFIs through the National Treasury and re-financed qualifying home loans from participating PMLs (Primary Mortgage Lenders), with rates on the re-financed loans coming down to single digits (below 10 per cent), materially lower than previous average rates of 12 per cent.
The KMRC is resolving the asset maturity mismatch blamed for high-interest rates on home loans in Kenya. The company mobilizes long-term funds, which it then on-lends to participating lenders, including commercial banks, savings and credit cooperatives (SACCOs) and microfinance institutions (MFIs). The lenders can then match the maturities of the long-term credit available to them from KMRC with the home loans they offer to borrowers, resulting in lower interest rates, hence driving affordability.
Established in April 2018 as a Public-Private Partnership (PPP), under the supervision of the Central Bank of Kenya (CBK), KMRC’s role is to provide long-term funds to primary mortgage lenders (Banks, Micro Finance Banks and Saccos) to increase the availability of affordable home loans to Kenyans by providing low interest, fixed-rate, long term finance to mortgage financiers so that they can transfer the same benefits to individual borrowers, making home loans more accessible and affordable for Kenyans. A wholesale institution, KMRC also aims at contributing to the growth of Kenyan capital markets through the issuance of corporate bonds as a source of sustainable long-term funds, assisting in the standardization of mortgage practices in Kenya through enhanced capacity building to member institutions on the origination of mortgages and contributing to the growth of the mortgage market in Kenya through support to Primary Mortgage Lenders.
KMRC affordable housing loans are extended to Primary Mortgage Lenders to re-finance mortgage loans capped at Ksh 4 million in Nairobi metropolitan area (Nairobi, Kiambu, Machakos and Kajiado) and Ksh 3 million elsewhere to individual borrowers whose monthly household income is not more than Ksh 150,000. Find more at www.kmrc.co.ke
