World Bank has recently approved USD 247 Million loan for the people of Kenya who are inaccessible to the housing finance. This loan will not only help the people to access proper housing finance but will also help Kenya Mortgage Refinance Corporation (KMRC) for its establishment and proper functioning. KMRC is mainly owned by the Private sector and Non-deposit taking financial institution undertaken by Central Bank of Kenya. Nearly 80 per cent of it is in the hand of the private sector while 20 per cent is handling by Government Treasury.
KMRC provides long long-term funding to the financial institution, which interns offers affordable long term loan to the home buyer. KAHFP(Kenya Affordable Housing Finance Projects) also help the Ministry of Lands and Physical Planning to increase property registration and maintain Land Management system in Kenya. This project will be jointly implemented by KMRC, Land Ministry and the National Treasury.
Felipe Jaramillo World Bank’s Kenya Country Director said that they believe Kenya vibrant private sector offers enough skills and resources to achieve affordable housing goals and the World Bank’s agenda to maximize finance.
Currently, commercial banks in Kenya hold not more than 26,000 mortgage loans which valued around USD 108.6k. With many reasons such as 2016 interest rate cap, Non-Performing Loan (NPL) ratio of 12 per cent has led to tightening of credit standards and offers variable interest rate which ultimately becomes an inaccessible loan to low and middle-income individuals.
Kenyans secure loans from SACCOS, which estimate to be around 90 per cent at an interest rate of 12 per cent. Although it has a low-interest rate, short term tenure, not more than 5 years makes it restrictive to get housing finance to everyone. KAHFP(Kenya Affordable Housing Finance Projects) is expected to multiply its access to finance by increasing proportions of urban households with access to mortgages. With its strong economic influence, this project will increase employability to its linked sectors, and with better housing, Kenyans will also improve health and education.