Government Mortgage Firm to deliver Cheaper Homes

The State-backed company to implement the social housing project to advance cash to banks and saccos for on-lending to home buyers is to be launched tomorrow with commercial banks, mortgage companies and the World Bank as its principal shareholders.

Known as the Kenya Mortgage Refinancing Company, partners will include the National Treasury, seven commercial banks, World Bank and its subsidiary, IFC and mortgage lender HF Group. It is set to advance cash to commercial banks, saccos and mortgage companies on a wholesale basis to enable them to give affordable loans to account holders or members to buy or build homes.

Part of the Big Four Agenda, the affordable housing programme targets individuals whose incomes cannot allow them to take home loans from financial institutions.

Housing Principal Secretary Charles Hinga says the KMRF will operate as a private sector-driven company with the purpose of developing the primary and secondary mortgage markets through the provision of secure, long-term funding to the mortgage lenders, thereby increasing the availability and affordability of mortgage loans to Kenyans.

“Before June, we are setting up the KMRF to enable more Kenyans own homes,” says the PS.

The government is offering an initial Sh1.5 billion capital to establish the company and then open it up to equity investors who will provide more funds.

It is hoped that the company will enable mortgage financiers to issue 50,000 home loans in five years. The country’s mortgage book stood at 24,085 in December 2016, having grown by a mere 6,000 over a five year period.   

Providing affordable housing is one of the four priority areas by the government that aims to add to the market half a million low cost homes in five years

The mortgage company will also extend the tenure of housing loans from the current average of seven years to at least 20 years and help drive interest rates on mortgages to single digits.