KMRC is a non- deposit taking financial institution under the supervision of the Central Bank of Kenya. The company was incorporated on 19th April 2018
with the single purpose of providing long-term funds to primary mortgage lenders (Banks, Micro finance banks and Saccos) in order to increase the
availability and affordability of mortgage loans to Kenyans. KMRC is one of the key institutions under the Affordable Housing Pillar of the Big 4 Agenda.
KMRC was established as a private public investment with majority ownership by the private sector at 80% and Government 20%. Its current shareholders comprise: The National Treasury and Planning; eight (8) commercial banks; eleven (11) Deposit Taking Savings and Credit Co-operatives (Saccos) and one
(1) microfinance bank.
KMRC is not a parastatal /state corporation or Housing Fund. KMRC is structured as majority private sector led financial institution.
As a non-deposit taking financial institution, KMRC will primarily be funded through debt and equity. KMRC equity capital will be invested to generate income to run the institution. In order to re-finance portfolio of residential mortgages, KMRC will initially mobilize long term funding from International Development Finance Institutions through the National Treasury. In the medium term, and to ensure sustainability KMRC will issue bonds in the capital markets to raise funds to refinance mortgages
- KMRC will improve asset liability risk management thus help financial institutions to significantly scale up provision of housing finance and extend repayment periods.
- Improve liquidity management by gaining ability to cover unexpected short-term deposit outflow, thereby avoiding potentially costly short-term borrowing or asset liquidation;
- KMRC will promote standardized lending practices across market players due to set eligibility criteria for refinance, which will drive market efficiency and help develop the secondary mortgage market;
- Reduced barriers to entry for smaller lenders, since they will access capital market funding on similar terms and conditions as large lenders;
- Lower overall transaction costs by pooling issuance as compared to PMLs accessing the markets individually. KMRC will be a regular issuer of long-term, high quality investments needed by institutions with long term liabilities such as pension funds, social security funds and insurance companies.
Both KMRC and NHDF are institutions established to complement and support the government Affordable Housing Pillar under the BIG 4 Agenda. KMRC supports this Agenda on the demand side by extending long-term funds to primary mortgage lenders to enable them avail affordable housing loans to the people.
NHDF on the other hand was established to support the Affordable Housing Agenda on the supply side by providing offtake arrangements through tenant purchase (TPS) scheme and offtake guarantees to the developers.
No, KMRC will re-finance residential mortgage loans generated from properties built under the Government Affordable Housing programme as well as from other players in the housing sector.
KMRC will offer two categories of bulk loans to PML’s
- Affordable housing loans: these loans will offered to primary mortgage lenders to refinance affordable mortgage loans capped at KES 4 million within Nairobi metro; and KES 3 million elsewhere and extended to borrowers with a monthly income of not more than KES 150,000.
- Market housing loans: these loans will be extended to primary mortgage lenders to finance housing loans issued at market rates.
- Affordable housing loans: Owner occupied, titled residential properties; free-standing or apartment; properties occupied by immediate relatives of owner (Parents, spouses, children and grandchildren).
- Market housing loans: Residential properties.
KMRC will not acquire and hold as assets in its books the mortgage loans issued by the primary mortgage lenders and re-financed or assume direct credit risk on the mortgage loans. Origination and servicing of the loan remains with the primary mortgage lender. If a loan pledged to KMRC becomes non-performing, the PML will have to replace it with a performing loan.
KMRC is a wholesale financial institution and will therefore not participate in the retail market by directly providing financing to individual borrowers.
- Borrowers will access longer term housing loans leading to lower monthly repayments thus improved disposable cashflow.
- Borrowers are expected to enjoy competitively priced mortgage offering in the market due to the increase in the number of institutions offering mortgage solutions.
- Increased competition amongst housing loans providers will lead to innovatively designed mortgage products, thus wider choice for customers.
- Borrowers will also benefit by increased home ownership and growth in household asset base.