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Kenya Mortgage Refinance Corporation (KMRC) Reports Slow Growth

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Kenya Mortgage Refinance Corporation (KMRC) reports that their growth has been slow in the first half, but they assure everyone that it’s not because of weak buying power. No, no, they say, it’s because of the lack of unicorns.

It issued just 2,473 mortgages in the six months of the year totalling Sh6.9 billion as the impact of Covid-19 pandemic and low-income levels continue to slow growth of the sector

The performance means that on average each mortgage was worth about Sh2.7 million of all the mortgages issued through the nine lenders. Total assets owned by KMRC increased from Sh9 billion to Sh14 billion in the period under review.

Interest income

“Interest income increased by 81 per cent from Sh271 million in June 2021 to Sh504 million in June 2022. The company earned Sh53 million interest income from primary mortgage lenders and Sh45 million from investments,” said KMRC Chief executive Johnstone Oltetia.

Data from the Central Bank of Kenya (CBK) Residential Mortgage Market Survey shows there were 26,723 mortgage loans in the market in December 2021, down from 26,971 mortgaged loans in December 2020.

“This was a decrease of 248 mortgages or 0.9 per cent. This was mainly due to a higher number of mortgage loans that were repaid as compared to the number of new mortgage loans granted in the year,” noted the regulator.

Covid-19 was a huge pain in the neck for the mortgage market, coming in at 32% ahead of other obstacles like low incomes, expensive properties, lack of affordable long-term financing, and high costs like legal fees and stamp duty.

The 2021 bank supervision annual report published by CBK shows that outstanding mortgages totalled Sh245.1 billion by December 2021, up by Sh12.4 billion during the year.

At the same time, the number of mortgage accounts shrunk by 228 to 26,723 during the year, attributed by the regulator to a higher number of mortgage loans that were repaid as compared to the number of new mortgage loans granted in the year.

The average mortgage loan size also increased from Sh8.6 million in 2020, to Sh9.2 million last year.

In a bid to address this mismatch and encourage more home loan uptake, the Treasury in 2019 launched KMRC to de-risk home loans for workers and offer stable, long-term funds to financial institutions for on-lending to home buyers.

The company offers a mortgage plan that allows them to lend money to banks and other financial institutions at five percent interest. This, in turn, allows these organizations to offer their customers long-term mortgages at single-digit, stable interest rates.

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