Thursday, March 28, 2024

Co-op Bank gets Sh. 550 million for affordable mortgage lending

Co-operative Bank received Sh. 549.8 million from the Kenya Mortgage Refinance Company (KMRC) for onward affordable mortgage lending.

This funding is meant to support the bank’s efforts aimed at providing affordable home loans to its customers.

According to Co-op Holdings, which is the majority shareholder at Co-op Bank, the bank inked the agreement with KMRC in June 2021.

“In June 2021, the Co-operative Bank entered into an agreement with the KMRC for a credit facility at a fixed rate of five percent to finance affordable housing mortgage loans,” said Co-op Holdings in its 2021 financial report.

“As of the end of 2021, the amount disbursed to the bank was Sh. 549.79 million.”

KMRC is giving home loans at lows of around five per cent through strategic lenders such as Co-op Bank. Under KMRC, mortgage loans have been capped at Sh. 4 million in the Nairobi metropolitan area (Nairobi, Kiambu, Machakos and Kajiado) and Sh. 3 million elsewhere.

These loans are only accessible to individual borrowers whose monthly household income is not more than Sh. 150,000.

How investment in Co-op Bank’s subsidiaries is paying off

As at the end of 2020, Central Bank of Kenya (CBK) data showed that Co-op Bank had 1,285 mortgage accounts, with loans worth Sh. 11.9 billion.

The lender’s subsidiary, Kingdom Bank, had also issued mortgages worth Sh. 1.19 billion from 203 accounts.

The new funds will come as a relief for thousands of aspiring home owners who have thus far been locked out of home ownership by exorbitant interest rates.

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