Introduction
Are you planning to own a home in Kenya but are struggling to find affordable financing options? Look no further than the Kenya Mortgage Refinance Company (KMRC). Established in 2018, KMRC is a public-private partnership that aims to provide affordable mortgage financing to Kenyans. In this article, we’ll explore what KMRC is, how it works, and how it can benefit you.
What is Kenya Mortgage Refinance Company?
KMRC is a company that provides long-term funding to mortgage lenders in Kenya. It does this by buying mortgage loans from banks, mortgage companies, and Saccos (savings and credit cooperatives) and refinancing them. This helps these lenders free up their capital, which they can then use to issue more mortgages to eligible borrowers.
How Does KMRC Work?
KMRC operates as a wholesale lender, meaning that it lends money to other lenders rather than directly to consumers. It buys mortgage loans from these lenders at a discounted rate and then refinances them at a lower interest rate. This creates a pool of funds that participating lenders can use to issue new mortgages or refinance existing ones.
Who Can Benefit from KMRC?
If you’re a borrower looking for affordable mortgage financing, you can benefit from KMRC indirectly. Because KMRC provides long-term funding to mortgage lenders, these lenders can offer lower interest rates and longer repayment periods to eligible borrowers. This means that you can potentially save money on your mortgage payments and have more time to pay off your loan.
What are the Benefits of KMRC?
KMRC offers several benefits to both lenders and borrowers. Here are some of the key advantages:
For Lenders:
- Access to long-term funding at a lower cost
- Increased liquidity and capital efficiency
- The ability to issue more mortgages and grow their business
For Borrowers:
- Access to affordable mortgage financing
- Lower interest rates and longer repayment periods
- The ability to qualify for a larger mortgage loan
How Can You Access KMRC Financing?
As a borrower, you cannot access KMRC financing directly. Instead, you need to apply for a mortgage loan from a participating lender. These lenders include banks, mortgage companies, and Saccos that have signed up with KMRC. To qualify for a mortgage from these lenders, you need to meet their eligibility criteria, which may include a minimum income requirement, a good credit score, and a down payment.
What is the Eligibility Criteria for KMRC?
To qualify for KMRC financing, lenders need to meet certain criteria. These include:
- Being a registered financial institution with the Central Bank of Kenya
- Having a minimum of KES 1 billion in core capital
- Having a track record of mortgage lending
- Being compliant with all relevant regulations and guidelines
What are the Terms of KMRC Financing?
KMRC offers long-term funding to lenders at a fixed interest rate. The exact terms of the financing depend on the lender and the borrower’s creditworthiness. However, KMRC’s interest rates are generally lower than those offered by commercial banks.
How Does KMRC Help the Kenyan Economy?
KMRC plays a critical role in Kenya’s economic development. By providing affordable mortgage financing to Kenyans, KMRC helps promote home ownership, which is a key driver of economic growth. It also helps increase the liquidity and capital efficiency of mortgage lenders, which in turn stimulates economic activity.
What are the Challenges Facing KMRC?
While KMRC has the potential to transform the Kenyan mortgage market, it faces several challenges. One of the biggest challenges is the lack of affordable housing supply in Kenya. Without an adequate supply of affordable homes, even the most affordable mortgage financing may not be enough to help Kenyans access homeownership.Another challenge is the high risk of default among some borrowers. This is especially true for borrowers who have informal sources of income or who lack a credit history. To mitigate this risk, KMRC and its participating lenders need to have robust risk management processes in place.
Conclusion
In conclusion, KMRC is a game-changer for the Kenyan mortgage market. By providing long-term funding to mortgage lenders, KMRC helps increase the availability of affordable mortgage financing to eligible borrowers. If you’re looking to own a home in Kenya, consider applying for a mortgage from a participating lender. With KMRC’s support, you may be able to access affordable financing and achieve your dream of homeownership.