Uhuru launches mortgage company for cheap homes

President Uhuru Kenyatta has launched the Kenya Mortgage Refinance Company in partnership between the government and the private sector.

The initiative is aimed at reaching the goal of adequate, safe and affordable housing for all, especially the lower income group, which is part of the Big Four Agenda.  

The expectation of the refinance company is to contribute to the development of the housing finance market and to help increase the number of mortgages from the current 26,000 to over 60,000 by the year 2022. 

Speaking at the Windsor Golf Club on Wednesday, Uhuru said that the initiative is a policy response to the barriers that hinder access to affordable housing.

“We have recently rolled out the policy framework that will guide the transformation of the housing sector,” he said.

He said the government has been supporting initiatives aimed at developing innovative instruments to address the housing financing challenges.

“Establishment of the Kenya Mortgage Refinance Company that we are launching today is the highlight of these initiatives,” he added.

The President explained that once the scheme is operational, it will support a large proportion of creditworthy potential borrowers that are currently not able to access loans because they do not have a “formal salary”. 

KMRC will offer the housing finance market a credible, professional and high quality large-scale to medium long-term finance.

The company will be expected to provide fixed rate long-term funding to primary mortgage lenders, which will be passed to home buyers.

“Fixed rate mortgages would protect homeowners from the risk of interest rate volatility, hence allowing them to be in control of their monthly commitments and afford their homes,” Uhuru said.

Uhuru said the initiative will provide financial institutions with a liquidity back-stop and facilitate a greater level of maturity transformation.

In addition, developers would need to position themselves to supply, innovative and affordable housing solutions.

This, he said, would not only allow the property market to function well, but also stimulate demand at the lower end.

“Every citizen deserves to live a dignified life that guarantees access to basic needs, provision of a decent shelter over their head being one of them,” Uhuru said.

This initiative has been supported by the World Bank and the African Development Bank, which committed Sh25 billion and Sh10 billion, respectively.