The National Treasury has proposed the setting up of the Kenya Mortgage Refinance Company (KMRC) which will be registered as a Non-Deposit-taking Financial Institution. KMRC will serve to provide funding and capital markets access to primary mortgage lenders at attractive interest rates resulting in greater availability of fixed rate mortgages and longer term loans.
Currently, there is sufficient supply of housing, but only for the upper-income groups. There is however a severe shortage of affordable homes for lower-income majority, estimated at over 500,000 homes.
KMRC will lend primarily to address this gap in affordable housing.
KMRC shareholding will include a maximum Government shareholding of 20%, with the rest made available for private sectors investors, especially financial institutions active in housing sector including banks, deposit-taking microfinance institutions and SASRA-regulated Saccos.
The Sh200 million capital injection by Co-op Bank is the first major financial commitment by the private sector.
Co-op Bank investment in KMRC under the Big4 Agenda in Housing is vital due to the following reasons;
As a bank that since inception has been a close partner of Government in delivering its socioeconomic agenda for the majority, Co-op Bank is living its calling and mandate in partnering to deliver affordable housing under the Big4 Agenda.
As a bank that is predominantly-owned by millions of Kenyans through the co-operative movement, Co-op Bank is keen to better the fortunes of the majority through progressive partnership such as the Big4 Housing Agenda.
The additional financing that KMRC will make available is likely to give a substantial boost to the badly-needed long-term money for funding development of affordable homes for the Kenyan majority.
Conventional mortgages have proven NOT suited for home financing in Kenya, with uptake remaining low many decades since they were introduced in the market. Alternatives have to be explored. All banks put together have barely 25,000 mortgage loans as at this point, in a country suffering a deficit of over 500,000 houses.
The Co-operative Movement (who predominantly own the Co-operative Bank) and especially Saccos have gallantly proven more capable of helping Kenyans own homes, and are currently financing upto 100,000 homes a year. It is therefore logical that the Co-operative Movement and Co-op Bank takes a leading role in supporting KMRC as their mutual objectives of providing affordable housing are perfectly aligned.
Co-operative Housing is a time-tested and proven financing model for providing affordable homes. It is therefore imperative that Co-op Bank together with the Co-operative movement take a front-and-centre role in expanding their proven affordable co-operative housing model especially now that the Government under the Presidents Big Four Agenda is keen to expand access to affordable housing.
“The Co-operative movement and especially Saccos have proven their capability in enabling Kenyans own homes in an affordable fashion. We expect the Co-operative Bank and Saccos to play a major role in bridging Kenya’s housing deficit now that the Government under the Big Four Agenda has made access to affordable housing a key priority,” said Co-op Bank Group Managing Director & CEO Dr. Gideon Muriuki.