If you have Sh10 million you can own the newest lender in town that will be backed by the World Bank and the government.
The firm, Kenya Mortgage Refinance Company, will be owned 20 percent by the government with a minimum Sh10 million share capital commitment and will have a total share capital of Sh5 billion.
Although the firm will not take deposits, it will come with advantages as it will operate as a fully commercial entity but will seek waivers on certain regulatory requirements to enable it achieves its objectives.
It seeks to deepen the mortgage market by handing banks low-cost money for onward lending and will receive a Sh16.1 billion ($160 Million) from the World Bank to start operations in April.
It will be offering cheap bonds to mortgage lenders especially banks and saccos to reduce the cost of home loans and lengthen payment durations.
The lack of long-term funding has also resulted in many mortgage lenders offering terms that are 7 to 15 years instead of the 20 to 25-year terms needed to make housing finance more affordable for borrowers.
Mortgage rates have been oscillating between 20 and 13 percent over the years which has kept the number of mortgages below 30,000.
In 2016 for the first time in 5 years, the number of mortgages in the country declined by 1.5 percent from 24,458 to 24,085 attributed to less issuance of mortgages.
SACCOs, which charge non-average 12 percent tend to lend at rates below market but their majority and often sole source of funding is deposits. Therefore, they are highly constrained in the maturity of the loans they can provide.
As the government seeks to build more houses it needs Kenyans to buy them and lowering the cost of mortgages will help it raise demand for the half a million big four agenda houses.