A financial institution with a seed capital of Sh35 billion has been launched to offer cheap mortgages.
President Uhuru Kenyatta launched the Kenya Mortgage Refinance Company (KMRC) as part of efforts to achieve affordable housing, one of his Big Four Agenda.
Borrowers with a monthly income of not more than Sh150,000 per month are eligible for the loans that will be capped at Sh4 million in Nairobi, Kiambu, Machakos and Kajiado and Sh3 million for the rest of the country.
The launch of KMRC, which is owned 80 per cent by the private sector and 20 per cent by government, signals the roll-out of construction of at least 500,000 low cost houses across the country.
The company will be regulated and supervised by Central Bank of Kenya with Capital Markets Authority (CMA) oversighting its bond issuance operations.
It will offer the housing finance market a credible, professional and high quality large-scale medium to long-term finance.
“I expect the refinance company to significantly contribute to the development of the housing finance market in Kenya and help reverse the low mortgage penetration by increasing the number of mortgages from the current 26,000 to over 60,000 by the year 2022,” Uhuru said.
To set the ball rolling, Uhuru said World Bank and African Development Bank (AfDB) have given his administration Sh35 billion for use in the construction of low-cost houses.
He said the project adds the momentum of his administration to enhance access to affordable housing for all.
Data from Kenya National Bureau of Statistics shows that the country has an estimated housing shortage of 150,000 units annually but only 50,000 units are added every year.
However, most of the additional units are constructed at profit-driven commercial developers who target high income households.
Uhuru lauded the collaboration between government and the private sector, saying it demonstrates a growing synergy in the delivery of public goods and progress in transforming the lives of people.
He said the launch of KMRC is a policy response to the barriers that hinder access to affordable housing.