The Central Bank of Kenya has invited Kenyans to deliberate on the Draft Central Bank of Kenya (Mortgage Refinance Companies) Regulations, 2019.
The draft regulation has been formulated by CBK to provide a clear framework for licensing, capital adequacy, liquidity management, corporate governance, risk management, and reporting requirements of Mortgage Refinance Companies.
“The Finance Act, 2018 amended the Central Bank of Kenya Act (CBK Act) to provide the legal framework for the licensing and regulation of the mortgage refinance business and to bring the operations of Mortgage Refinance Companies (MRCs) within the regulatory and supervisory purview of the Central Bank of Kenya,” says a statement from CBK.
MRCs will refinance Primary Mortgage Lenders such as commercial banks, microfinance banks and Saccos using funds from the capital markets so as to provide affordable mortgages to eligible members of the public.
Affordable housing is one of President Uhuru Kenyatta’s pillars in his Big Four Agenda. MRCs are expected to increase availability and affordability of mortgage loans in the country.
An average Kenyan has a GDP per capita of US$3,657 per annum, making it impossible to afford a decent home build by formal developers leading to a very inaccessible mortgage market.
Kenya is facing a critical shortage of housing units. There is a backlog of 2 million housing units, and the backlog increases by 150,000 units every year due to several factors including the limited availability of mortgage finance and developer finance.
CBK invites comments on the draft Regulations by Thursday, February 28, 2019.