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42 banks, saccos bid for KMRC home loans
Kenya Mortgage Refinance Company (KMRC) CEO Johnstone Oltetia addressing participants during the Annual General Meeting (AGM) of Nation DT Sacco at St. Andrews Church in Nyerere Road, Nairobi on February 15, 2025.
The Kenya Mortgage Refinance Company (KMRC) is reviewing documents from 42 commercial banks and saccos for eligibility to start accessing funds for onward lending to potential home buyers after the firm opened to non-shareholding lenders last year.
A confidential expression of interest document seen by the Business Daily shows that two tier-one commercial banks are among 13 lenders waiting to start getting long-term loans from KMRC to start offering subsidised mortgages. The list also contains 29 saccos.
The firms are bidding to join 20 lenders – nine banks and 11 saccos – who access subsidised housing loans as shareholders of KMRC.
This is after KMRC opened up its Mortgage Liquidity Facility to non-shareholders to broaden access to home loans in a country with a thin retail market of slightly more than 30,000 accounts.
“The condition is that you should be prudentially regulated by either CBK (Central Bank of Kenya) or Sasra (Saccos Regulatory Authority) because there are institutions which are not prudentially regulated such as those regulated by ministries,” KMRC Chief Executive Officer Johnstone Oltetia told the Business Daily on March 27.
“All commercial banks should be offering mortgages to qualify for KMRC refinancing, while Saccos should express an intention to start.”
KMRC, which is 25.3 percent owned by the government, offers funds to primary mortgage lenders at an annual interest of five percent.
The primary lenders are then expected to advance the mortgages to prospective homebuyers at a fixed single-digit rate, which currently averages 9.95 percent, with a repayment period of up to 25 years.
The KMRC’s facility also allows lenders to offer a loan-to-value ratio of 105 percent compared with the industry’s average of 90 percent, enabling homebuyers to cover associated transaction costs such as legal fees and stamp duties in addition to the cost of the unit.
The Business Daily has not publicly disclosed the names of the banks and lenders who have applied to start drawing funds from KMRC for confidentiality reasons.
However, I&M Bank which is one of the lenders on the list is marketing KMRC-backed mortgages under its Miliki Nyumba product.
“We are currently undertaking the process of approval which includes assessing their creditworthiness just like a bank will assess that of a borrower,” Mr Oltetia said.
“We also check that they comply with the prudential regulations, they are profitable, we go on-site and check that they have a mortgage book and review it to ascertain it complies with KMRC requirements.”
KMRC-backed loans should conform to the environmental and social impact criteria by the National Environment Management Authority (Nema), locking out houses on land in heritage sites, flood-prone areas, and road reserves.
KMRC raised €219 million (about Sh28.47 billion at the current exchange rate) from the World Bank in 2020 under a facility that expires this June and €90 million (about Sh13.23 billion) from the African Development Bank which expires mid-2026.
The firm also raised about Sh1.4 billion from the first bond issued in February 2022 and plans to raise more cash through a second one to finance various projects.
KCB, Co-op, NCBA, Stanbic, DTB, Absa, HFC, and Credit banks control about 44 percent stake in KMRC, while Mwalimu, Unaitas, Stima, Ukulima, Harambee, Kenya Police, Safaricom, Imarika, Bingawa, Tower and Imarisha saccos own about 9.9 percent shareholding.
