State-run Kenya Mortgage Refinance Company (KMRC) increased the size of mortgage loans to commercial banks and Savings and Credit Co-operatives (SACCOs) to Ksh 8 million in Nairobi as well as neighbouring Kiambu, Machakos and Kajiado Counties from the previous Ksh 4 million.
KMRC has also doubled the cash it disburses for purchasing homes in the rest of Kenya to Ksh6 million from Ksh3 million.
“Inflation already increased the cost of inputs and that means you have to also increase available financing for units,” KMRC Chief Executive Johnson Oltetia told the media recently.
Over the past few months, Kenya’s construction industry has experienced price growth of materials such as steel, paint and cement- a rise blamed partly on the ongoing Russia-Ukraine conflict, which has caused global supply chain disruptions.
Figures indicate that Russia and Ukraine control nearly a fifth of the global steel export trade.
Besides doubling the mortgage size, KMRC has also raised the allocation to 105 percent of the value of the purchased home from 90 percent, eliminating the need for buyers to make upfront payments.
In the prior financial arrangement, prospective homebuyers were required to pay a deposit of at least 10 percent of the value of the house before tapping into the state-run mortgage facility.
The list of SACCOs that are classified as primary mortgage lenders of KMRC includes Bingwa Sacco, Harambee Sacco, Imarika Sacco, Imarisha Sacco, Kenya Police Sacco, Stima Sacco, Tower Sacco, Safaricom Sacco and Ukulima Sacco.
On the other hand, commercial banks that can tap into the KMRC facility include Absa Bank, Co-operative Bank of Kenya, Credit Bank, Diamond Trust Bank, HF Group, KCB, NCBA, and Kenya Women Microfinance Bank.
KMRC is doubling its offer to primary mortgage lenders ahead of the issuance of its second tranche of the Ksh 10.4 billion bonds, scheduled for the middle of 2023.
In early February 2022, KMRC raised Ksh 1.4 billion from the first tranche of its Medium Term Note (MTN) program and a five times oversubscription of Ksh8.1 billion.
KMRC has used proceeds from these notes in diversifying financing from other sources, such as concessional funding from the World Bank and the Africa Development Bank (AfDB).
KMRC hopes to onboard other financial institutions over the next two years in the issuance of mortgages by improving their capacities to absorb new mortgage loans.
KMRC had set a target to expand its pipeline of mortgages issued to Ksh6 billion by the end of last year after disbursing Ksh 1.3 billion to primary mortgage lenders, including Housing Finance, Tower Sacco, Stima Sacco, Unaitas Sacco, Credit Bank, Co-operative Bank and Ukulima Sacco. The state-backed mortgage firm said it has set aside a pipeline of Ksh 9 billion and plans to disburse more than Ksh 3 billion by mid-July 2023.
