Issuance of title deeds slows down state housing loan project

Economy

Issuance of title deeds slows down state housing loan project


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Summary

  • The Kenya Mortgage Refinancing Company (KMRC) says comments from banks and saccos have shown that the supply of affordable housing has been constrained by lengthy land titling processes.
  • KMRC, which is 25.3% owned by the National Treasury with the rest of the stake controlled by private lenders, was created to reduce risks in the mortgage market by raising and lending long-term funds to mortgage providers.

Difficulties in registering land and processing title deeds have slowed down President Uhuru Kenyatta’s plan to allow workers earning less than Sh150,000 a month to buy houses on subsidized loans.

The Kenya Mortgage Refinancing Company (KMRC) says comments from banks and saccos have shown that the supply of affordable housing has been constrained by lengthy land titling processes.

KMRC, which is 25.3% owned by the National Treasury with the rest of the stake controlled by private lenders, was created to reduce risks in the mortgage market by raising and lending long-term funds to mortgage providers.

“The biggest challenge they (the banks and the Saccos) keep saying is that we don’t have the supply (of houses) that meets the requirements. These challenges are primarily related to land registration and titling processes,” Chief Executive Johnson Oltetia said.

“People are ready to build, but they don’t have titles. You cannot take out untitled mortgages [deed] because that’s the first thing you need.

Prospective home buyers, who are eligible for home loans under the KMRC, have access to up to 4 million shillings for homes in the Nairobi metropolitan area and 3 million shillings elsewhere, with a repayment period of up to go up to 20 years.

KMRC data shows that it advanced 2.748 billion shillings to financial institutions in the first full year of operation which ended in June 2021, when it had a line of credit of more than 30 billion shillings from the World Bank Group and the African Development Bank (AfDB).

The company, which was granted permission to officially start operations in September 2020, offers long-term funds to banks and Saccos for subsequent loans to homebuyers at an annual interest rate of 5%.

Beneficiary lenders are, in turn, expected to lend the money at single-digit interest rates.

KCB Group #ticker:KCB – the largest mortgage financier by market size – received more than three-quarters of the 2.748 billion shillings issued in the financial year ending June 2021, which covered around 1,400 qualifying mortgages size, interest and duration under the KMRC Disbursement Criteria.

The other beneficiaries were HF Group (Sh515 million), Stima Sacco (Sh69million) and Tower Sacco (Sh30 million).

The average size of the 1,400 home loans refinanced by KMRC in the last fiscal year is 2.6 million shillings, more than three times less than the average banking sector mortgage size of 8.6 million shillings last year. last year.

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