The National Treasury has today launched the Kenya Mortgage Refinance Company (KMRC). KMRC which is basically a liquidity facility has been established with the purpose of addressing the financing challenges and also unlocking liquidity for affordable housing which is part of the government’s Big 4 agenda.
KMRC was incorporated in April 2018 as a Limited liability company under the Companies Act 2015. It will serve the purpose of providing secure long-term funding to primary mortgage lenders (Banks & Saccos) in order to increase availability and affordability of housing loans to Kenyans. The company will be regulated by the Central Bank of Kenya as a non-deposit taking financial institution, with the Capital Markets Authority (CMA) providing oversight over its bond issuance operations.
KMRC has been set up as a public private partnership arrangement whereby private sector owns 80% while the government owns 20%. This structure is expected to attract private sector funding to support affordable housing. The company recently closed a successful capital mobilization drive which resulted in eight (8) commercial banks, one (1) micro finance bank, and eleven (11) SACCO’s becoming shareholders of KMRC. In addition, two development finance institutions (Shelter Afrique & IFC) are keen to invest equity in KMRC and are currently finalizing their due diligence processes.
The company has already started to attract funding with the World Bank approving a $250 million International Bank for Reconstruction and Development (IBRD) credit to support the Government Affordable Housing program in April. On May 15, this year, the African Development Bank (AfDB) approved a further $100 million to support the program. These funds will be applied towards enhancing access to affordable housing finance, strengthening KMRC balance sheet, and providing requisite credit enhancements to support KMRC issuance of bonds.
KMRC is expected to extend long term loans at fixed rates to financial institutions secured against mortgages so that they can extend the maturity of their housing loans to their customers, hence increasing affordability. It will also enable Kenyans to access longer term housing loans and enjoy a wide choice of competitively priced mortgage offering in the market due to increased competition and product innovation amongst banks and other financial institutions. Eventually, this is expected to lead to an increase in home ownership and growth in household assets.