Kenya Mortgage Refinance Company (KMRC) has introduced a Mortgage Guarantee Trust, a facility that will mitigate risks for banks and SACCOs providing home loans to high-risk individuals, particularly low to mid-income workers.
- KMRC’s role includes de-risking the mortgage market by offering long-term funds to participating lenders at a fixed interest rate of 5.0%, with a repayment period of up to 25 years.
- The credit-sharing facility is poised to expand KMRC’s reach to workers in the informal sector, encompassing approximately 84.0% of Kenya’s labour force.
- Regulated Deposit-Taking SACCOs disbursed KSh 680.4 billion in loans in 2022, compared to KSh 3,630.3 billion from banks.
Kenya Mortgage Refinance Company is a Government-backed firm established to provide mortgage liquidity facilities to banks, microfinance institutions, and SACCOs, at more attractive and affordable rates. It was set up in a Public Private Partnership(PPP) arrangement between the Government of Kenya and the World Bank, with the private sector holding 75.0% shareholding
It provides loans to mortgage lenders, pegged at KSh 8 million in Nairobi, Kiambu, Machakos, and Kajiado and KSh 6 million in other parts of Kenya.
The facility is accessible to individual borrowers whose monthly salary is not more than KSh 150,000. The mortgage advances are refinanced through concessional funding by the World Bank and African Development Bank (AfDB).
KMRC also provides bigger mortgages of more than KSh 8 million for developers handling massive housing projects-these housing loans are also refinanced by the World Bank and AfDB.
In 2022, Kenya Mortgage Refinance Corporation floated its first medium-term note (MTN) and raised KSh 1.4 billion, an oversubscription rate of 478.65%. Analysts attributed the high subscription rates to impressive high returns to investors of 12.5% and adequate financial backing from the World Bank and African Development Bank.
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