Successful implementation of the affordable housing development project is vital in spurring the uptake of mortgages that is still very low in Kenya.
This is mainly attributed to increasing default cases, slow uptake of new units and lenders shying away from long term commitments in the market segment that is compounded by high cost of houses.
High cost of credit is also blamed for the low uptake of mortgages in Kenya.
To address financing obstacles for mortgages, the government set up the Kenya Mortgage Refinancing Company as a financial intermediary between the capital markets and financial institutions.
The government has drafted the Central Bank of Kenya (Mortgage Refinance Companies) Regulations, 2019: “The Finance Act, 2018 amended the Central Bank of Kenya Act (CBK Act) to provide the legal framework for the licensing and regulation of the mortgage refinance business and to bring the operations of Mortgage Refinance Companies within the regulatory and supervisory purview of the Central Bank of Kenya.”
In this regard, and pursuant to Section 57(1) of CBK Act, the Regulations are intended to provide a clear framework for licensing, capital adequacy, liquidity management, corporate governance, risk management, and reporting requirements of MRCs.
CBK invites comments on the draft Regulations.
Despite this, most members of the public do not have adequate information about the various suitable and affordable housing products in the market.
There are about 20,000 mortgage accounts in Kenya, with the affordable housing agenda expected to provide the much needed impetus.
Government targets to have half a million new houses constructed by the year 2022 under the affordable housing agenda.