The Kenya Mortgage Refinance Company: Kenya’s Housing Shortage Panacea?


Housing shortage in Kenya is conversation that has been with us for a very long time. Stakeholders both in government and private sector have had several conferences over the years in a bid to resolve the housing crisis bedeviling the country. The challenges have been previously capture in our previous editions but here is a recap and these they include: rapid population increase, rapid urbanization,high cost of finance, high cost of land for housing development, high cost of houses, flat/declining income, and rapid rural-urban migration just but to mention a few. Major cities and towns are feelingthe real pressure of housing shortages. Lasting solutions have been elusive but now there seems to be a silver lining in the dark clouds of housing shortage. Introducing the Kenya Mortgage Refinance Company.

What is Kenya Mortgage Refinance Company?
KMRC is a financial institution that will be established to support long-term lending to Primary Mortgage Lenders (PML) such as banks by providing mortgage liquidity facility. The purpose of establishing KMRC is to offer the housing finance market in Kenya a credible, professional and high-quality large-scale medium to long-term refinance. It will be set up as a limited liability company incorporated under the Companies Act. It will be a newly created, non-bank financial institution that is restricted to providing long-term funding and capital market access to mortgage lenders and issuing bonds to investors. As a wholesale secondary market institution, it will neither take deposits nor lend directly to individual borrowers. The company will be subject to regulation and supervision of the Central Bank of Kenya (CBK) with CMA providing oversight over its bond issuance operations.

A real estate revolution, will it work?
The KMRC has been touted as the panacea of Kenya’s shortage of affordable housing. Kenya is borrowing the concept from other jurisdictions who have embraced this type of institution and has proven to be an important factor in the launching, growth, and success of mortgage finance markets in other emerging countries. KMRC would serve as a secure source of long-term funding at attractive rates while ensuring sound lending habits amongst PMLs resulting in greater availability of fixed-rate mortgages, and longer available loan terms. This would improve mortgage affordability, increase the number of qualifying borrowers and result in the expansion of the primary mortgage market and homeownership in Kenya while deepening the capital markets.

KMRC, a ray of hope The establishment of KMRC comes with much relief to many who had been locked out of home acquisition owing to affordability issues. Already, the players in both the financial sector and real estate industry have embraced the idea. There is no doubt that hopes are high among the aspiring homeowners as operationalization of KMRC brings closer to reality the dream of affordable housing. ing a great tourist spot having been voted as the best world top safari destination multiple times gives Kenya a head start in the scramble for revenue in intraregional tourism. Africa is on the rise!


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