President Uhuru Kenyatta on Wednesday launched the Kenya Mortgage Refinance Company, which seeks to increase the number of mortgages from the current 26,000 to over 60,000 by the year 2022.The World Bank and the African Development Bank have committed a total of 35 billion shillings($345million) towards the joint partnership between the private sector and the government.
Speaking in Nairobi, Kenyatta decried that housing mortgage finance in Kenya remains below its potential.
He pointed out that major inhibiting factors to the growth of the Kenyan mortgage market include lack of access to long-term finance, high interest rates on mortgages, high cost of houses, high incidental cost of mortgages, low levels of income and difficulties with property registration and titling
“As we continue to experience the dividends of our growing population, the housing supply has, over the years, not kept pace with the concurrent growth in the demand for houses. As a result, this has led to a huge housing deficit, particularly for the lower income households,” said Kenyatta.
According to the Central Bank of Kenya, total outstanding mortgage debt in 2017 stood at about 223 billion shillings ($2.2 billion).
This represents only about 2.74percent of GDP, which clearly shows clearly in Kenya the industry is still very small. South Africa, as an example, boasts of a mortgage sector accounting for 31percent of its GDP
“There is no doubt at all we are making progress in the quest for the transformation of the lives of our people. This ground-breaking initiative only adds the momentum to our quest to enhance access to affordable housing for all,” Kenyatta added.
The scheme will include a housing guarantee mechanism for those with low incomes or employed in the informal sector to help expand access to housing finance.