Govt eyes affordable housing with mortgage financing arm

The government will this month set up a new mortgage liquidity facility for housing developers as it targets reduced mortgage costs for individuals venturing into home ownership in the country.

Dubbed the Kenya Mortgage Refinancing Company (KMRC), the institution is geared at securing long-term funding for developers at attractive market rates with a view of ultimately resulting in the greater availability of fixed rate mortgages and longer loan terms for personal mortgage lenders.

Speaking during a stakeholder engagement on the formation of KMRC, Treasury Cabinet Secretary Henry Rotich emphasized KMRC’s role of reducing cost of mortgages for individuals.

“The primary objective of the Kenya Mortgage Refinancing Company is to operate as a private driven sector company with the public purpose of increasing the availability and affordability of mortgage loans to Kenyans,” Mr Rotich said.

Mr Rotich further added that like-minded facilities have ripped huge benefits for emerging mortgage markets elsewhere.

“This type of institution (KMRC) has proven to be an important factor in the launching, growth and success of mortgage finance markets in other emerging markets,” he said.

The Kenya Mortgage Refinancing Company will initially receive funding from the government and international financiers.

The Treasury CS however said there is room for banks to own a stake in the company as part of a private sector led initiative to make the financing model sustainable.

“Based on international experience, such facilities are owned by the banks or institutions which use it for refinancing,” Mr Rotich said.

Affordability has remained a major hurdle to growth in the housing and mortgage markets in the country with only 10.2 percent of the urban population in Kenya being able to afford financing for home ownership according the Centre for Affordable Housing Finance.

The average bank mortgage currently sits at Sh9.1 million meaning that only a few Kenyans stand a chance of acquiring housing finance.

This revelation is further reinforced by data from the 2015/2016 Kenya Integrated Household Budget Survey which indicate that only 26.1 percent of Kenyans in urban areas reside in their own dwellings

The setting up of Kenya Mortgage Refinancing Company is part of the government’s initiative to avail affordable housing to for all over the next five years.