Seven lenders lined up for home equity loans from the state agency

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Seven lenders lined up for home equity loans from the state agency


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Johnston Oltetia, managing director of Kenya Mortgage Refinance Company (KMRC). PHOTOS | DIANA NGILA | NMG

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Summary

  • Kenya Mortgage Refinancing Company (KMRC) said that Co-operative Bank, NCBA and lower tier Credit Bank, as well as four LOTS, have applied for the loans in this financial year.
  • Chief Executive Johnson Oltetia said the mortgage refinancing company was processing loans of Sh6.2 billion to cover approximately 4,000 mortgages from the 11 lenders.
  • The mortgage refinancing company, which was granted permission to formally start operations in September 2020, offers funds to banks and SACCO for subsequent loans to homeowners at five percent annual interest.

Seven other lenders, including three commercial banks, have joined the queue to refinance home equity loans under the state-backed plan that seeks to increase home ownership among workers earning less than 150,000 Sh per month.

Kenya Mortgage Refinancing Company (KMRC) said that Co-operative Bank, NCBA and lower tier Credit Bank, as well as four LOTS, have applied for the loans in this financial year.

They joined four others who benefited from Sh2.76 billion that KMRC advanced last financial year to cover approximately 1,400 mortgages. The four are KCB Group (Sh2.14 billion), HFC (Sh515 million), Stima Sacco (Sh69 million) and Tower Sacco (Sh30 million).

Chief Executive Johnson Oltetia said the mortgage refinancing company was processing loans of Sh6.2 billion to cover approximately 4,000 mortgages from the 11 lenders.

“KMRC’s goal is to help reduce interest rates in order to have lower rates and longer mandates. KMRC is looking to provide funding with a mandate of 20 to 25 years, “Oltetia said.

“We expect that over time the length of an individual to repay a (home) loan will increase from an average of 11 years to potentially 20-25 years – and that’s a very important aspect of affordability.”

KMRC, a joint venture between the Treasury and private lenders, was formed to eliminate housing loans for workers earning up to Sh 150,000 per month as part of President Uhuru Kenyatta’s plan to build 500,000 homes in five years until 2022.

The average mortgage size last year increased to Sh8.6 million from Sh8.5 million, as data from the Central Bank of Kenya show, blocking low- and middle-income workers from a market of 26,971 loan accounts worth of Sh232.7 billion.

The mortgage refinancing company, which was granted permission to formally start operations in September 2020, offers funds to banks and SACCO for subsequent loans to homeowners at five percent annual interest.

The borrowing lenders, in turn, are expected to lend the money at a single-digit interest rate, a market rate below the 12.1% average in September 2021.

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