Kenya’s Refinancing Company Increases Mortgage Maximum Limit

The move to double up the limits was attributed by the rising prices of residential units.

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Feb 8, 2023 - 16:00
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Kenya’s Refinancing Company Increases Mortgage Maximum Limit
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Kenya Mortgage Refinancing Company (KMRC), a state-backed mortgage refinancing company has increased the limit of maximum mortgage to be issued to its clients.

In the Nairobi Metropolitan Area, in Nairobi county, the limit has been increased to Ksh8 million while it was previously Ksh4 million. The same will apply to those in Kiambu County, Kajiado County, and Machakos County.

Whereas the rest of the 43 counties it has been increased from Ksh 3million to Ksh6 million.

The move to double up the limits was attributed by the rising prices of residential units following these factors:

There has been a renewed demand for buyers who has slowed down acquisitions at the peak of COVID-19 economic hardship.

The industry has seen an elevated price growth of key contruction inputs such as steel, pain and cement due to persistent supply chain distruptions occasioned by the Russian-Ukraine war.

Finally, the global and domestic inflationary pressures on general cost of goods and services on the back of high fuel prices, acute scarcity of the United State Dolla in the global economy, and the continuous devaluation of the Kenyan currency against the Dollar.

Additionally, the Central Bank of Kenya’s Bank Supervision Annual Report noted that banks and SACCOs which are in partnerships with KMRC will lend the mortgages at a rate of 9.5% which is lower than the market rate of between 11.5% and 18.8%.

In 2021, 26,723 Kenyans took mortgage loans from various financial institutions.

Furthermore, KMRC increased the Loan to Value Ration (LTV) to 105.0% from 90.0%, eliminating the previous 10.0% deposit required to be paid by a home-buyer before accessing the mortgage.

The institution stated that the 5.0% above the value of house under purchase will be used to cater for incidental costs such as legal fees and valuation.

The move is expected to reduce barriers buyers face to own houses making the state-backed mortgage more affordable and lucrative in the market especially for the first time buyers withing the low and middle-income class bracket.

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