Harambee Savings and Credit Cooperative Society (Sacco) is now offering housing loans of up to Sh8 million on the back of funds from the State-owned Kenya Mortgage Refinance Company (KMRC).
Harambee Investment Cooperative Society (HICS)Chief Executive Officer Mr. Gichuki Kabukuru said the loans which were previously capped at Sh4 million are pegged at a 9 percent interest rate for up to 25-year mortgages.
Mr Kabukuru noted that in September 2020 KMRC approved Sacco’s two mortgage products, Harambee Home loan which enables its members to purchase readily built houses, and the Harambee Jenga loan, where borrowers are facilitated to build a house on their parcels of land.
KMRC lends to banks and financial co-operatives at an annual interest of five percent, enabling them to write home loans at between seven to nine percent than the average market rate of 11.94 percent or 42 percent cheaper.
The Chief Executive Officer noted the increase in the amount of mortgages available to members of the Sacco was enabled after KMRC doubled the loan mortgage size from Sh4 million to Sh8 million for the metropolitan counties of Nairobi, Kiambu, Machakos, and Kajiado and to Sh6 million for the rest with the increasing cost of living and construction materials.
Each mortgage is pegged at member’s age until retirement at 60 years or 25 years’ repayment period where Jenga loans are based on a drawdown basis based on stage-by-stage arrangement during construction.
This means individuals who qualify for the subsidized loans or those earning less than Sh150,000, have to top up their loans with commercial credit should they seek a home above Sh8 million.
Speaking in Nakuru when he issued title deeds to 35 members in Gilgil along the Nairobi- Nakuru Highway, Mr Kabukuru indicated that the society was doing its share of helping the government achieve its agenda of providing affordable housing.
Harambee Investment Cooperative Society (HICS) is a subsidiary of Harambee Sacco. Mr Kabukuru put HIC’s net worth at Sh 600 million adding that it had more than 600 members.
On the other hand, the parent Harambee Sacco has over 80,000 members in 174 branches across the country. It draws its membership mainly from the Kenya Defence Forces, the National Police Service, the National Youth Service, the national and county governments, government parastatals and departments, and constitutional bodies.
Mr Kabukuru indicated that it was their dream to see every member become a land owner and eventually a home owner adding that Harambee Sacco was the most vibrant Sacco in Kenya.
The Chief Executive Officer noted that the interest rates were affordable and have gone a long way in opening the space for more members who could not have afforded the expensive mortgage products from other housing competitors in the market.
He said he was happy that Harambee Sacco was now attracting young members and added that its asset base grew from Sh37.01 billion in 2022 to Sh38.5 billion in 2023, while its share capital increased by 8 percent to Sh2.34 billion.
The Sacco also granted loans worth Sh29.13 billion in 2023, up from Sh27.23 billion in 2022.
KMRC was established by the National Treasury to support affordable housing development in Kenya. It was incorporated in April 2018 under the Companies Act to provide long-term financing to increase the availability of affordable home loans.
The government owns a 25 percent stake in KMRC, with the rest of the shares held by banks, saccos, and microfinance institutions.
So far, KMRC has disbursed over Sh8.1 billion to nine banks and 11 Saccos. The banks include KCB, Co-operative Bank, Housing Finance, Absa Kenya, NCBA, Diamond Trust Bank (DTB), Credit Bank, Stanbic Bank, and Kenya Women Finance Trust (KWFT), among others.
The Central Bank of Kenya puts the average mortgage rate in the country at 13 percent, meaning the rate granted by Harambee Sacco in partnership with the Kenya Mortgage Refinance Company (KMRC) is one of the lowest in the market.
By Anne Mwale and Dennis Rasto
