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.
With about 11 Saccos partnering with KMRC, many Sacco members are achieving their dreams of having decent homes, which previously were out of their reach. Expensive mortgage facilities locked out many.
Saccos have been keen to provide affordable housing solutions, playing a significant role in ensuring Kenyans’ have access to a low-cost mortgage.
For one, Rachel Mwangagi, having secured a Ksh. 4.0 million mortgage facility from Stima Sacco, whose interest rate is 9.0% with a repayment period of 15 years, has been a long wait, much more a pipedream. “This is the best thing that has happened to me since I was born. In this country, where do you get a loan at 9.0%? I was very excited because I had just repaid a Ksh 1.5 million loan earlier, and it took me some time because the rate was too high.”
Her Sacco, in partnership with KMRC, has enabled her to own a home and, more importantly, realize the quality of housing she has always desired, a quality she would not have been able to enjoy had she relied on her savings only for this undertaking.
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.
KMRC also aims to contribute 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 6 million in Nairobi metropolitan area (Nairobi, Kiambu, Machakos, and Kajiado) and Ksh5 million elsewhere to individual borrowers whose monthly household income is not more than Ksh 150,000.
Recently, the company held a stakeholders’ conference on affordable housing to enhance awareness of the Affordable Housing Program and investment opportunities in the sector.
Convened in partnership with the National Treasury and Economic Planning and the World Bank Group, the Kenya Affordable Housing Conference held at the Kenyatta International Convention Centre had the theme Unleashing Affordable Housing Potential to Drive Economic Growth.
“The most practical way to deliver housing solutions is to embed sustainability and inclusivity in the process. This can only be achieved through partnerships and collaboration with all stakeholders, including national and county governments, the private sector, housing cooperatives, landowners, and financiers, among other key value chain actors. The conference presented the perfect platform for the stakeholders to tackle issues in the sector and practically house wananchi collaboratively,” said KMRC CEO Johnstone Oltetia.
President William Ruto, late last year, detailed the Government’s plan to deliver 250,000 affordable housing units annually while launching housing units in Ongata Rongai, where he said that his administration is keen on collaborating with the private sector and county governments on developing affordable houses.
Housing is one of the basic human needs, with the Government mandated to ensure this right is progressively realized. Housing is also recognized as one of the critical sectors under the social pillar of Vision 2030.
The impact of KMRC-supported mortgages has gone a long way in ensuring many people have access to affordable housing loans. The KMRC-backed mortgage has a friendly interest rate enabling low-income earners to use their monthly rent to service their mortgage. Such an affordable housing program is helping even youths fulfill their homeownership dream, which seemed unattainable in the past.
Benefits of becoming a homeowner
Housing is a basic need, and it is in the interest of any country and its government to ensure that its people have decent housing. Equally, homeownership has several economic and social externalities – meaning that once you own a property, you have an asset that can be leveraged and that can provide a sense of security against potential economic shocks. Homeownership can also be used as part of leverage to finance other discretionary and emergencies. Thus, the need for decent housing cannot be emphasised. A homeowner is more likely to invest in their home that, in turn, raises their neighbours’ property values. For instance, a homeowner may be more likely than a renter to paint the exterior of their home, fix a hanging gutter or remove street debris outside their house. These actions may be intended entirely to improve the appearance of their home and, in turn, increase its resale value, but they also positively influence the values of the surrounding property. This whole aspect is known as a spillover effect. Homeownership promotes economic equality. It has been argued that homeowners, on average, earn higher incomes and have higher savings than renters. Home is an investment with proven immeasurable benefits.
