KMRC issue Sh2.75b for home loans

Kenya Mortgage Refinancing Company (KMRC) has disbursed Sh2.75 billion to four primary mortgage lenders (PMLs), even as it prepares to raise additional funds to support home loans through a bond issue next year.

Chief executive Johnstone Olteita said the money was part of a Sh4.5 billion loan portfolio available for immediate refinancing to participating financial institutions.

This first disbursement is drawn from the World Bank line of credit with KMRC set to tap funds from both the Bretton Woods institution and African Development Bank.

First beneficiaries

First beneficiaries of the facility include KCB Bank, HF Bank, Stima Sacco and Tower Sacco with each receiving Sh2.13 billion, Sh514 million, Sh69 million and Sh29 million, respectively.

Olteita said the initial lending, provided at a fixed rate of five per cent per annum, will help mortgage lenders create new mortgages in the market on long term-tenor within single digits rates.

“Today’s disbursement of funds marks a historic new dawn in affordable housing finance in Kenya.

It illustrates the legal, structural and strategic foundations that we have been putting in place since inception for a fit for-purpose mortgage refinance company,” said Oltetia.

Part of the funds are earmarked for financing the Affordable Housing Programme’s Park Road Housing Project.

KCB and HF Bank are among seven local banks that have committed to set aside Sh365 billion worth of mortgages for the Affordable Housing Programme.

Regarding the bond, Olteita said KMRC had reached a deal with African Development Bank to provide a partial credit guarantee, with further support from World Bank group, since they don’t have a track record in the market.

“The bond will be issued in the third quarter of 2021,” said Olteita. The funds will help cater for the market-based housing finance, beyond the refinancing of affordable mortgages which is capped at Sh4 million within Nairobi metropolitan and Sh3 million elsewhere in the country.

KMRC was this year, September, issued with a license by Central Bank of Kenya, paving way for disbursement of funds by the World Bank and the AfDB to the tune of Sh35 billion in form of debt financing through the National Treasury.