The micro financier said Monday it had loaned out a total of Sh2 billion since its formation two years ago, out of which Sh300 million was lent to mortgage borrowers.
"I have set aside over Sh700 million in addition to this funding partnership to support our new home owners," said Rafiki CEO
The lender will disburse the loans at a fixed rate of 18 per cent, which is at par with commercial bank rates.
The high cost of mortgage loans has been cited as the biggest hindrance to the supply of homes to middle and low income earners.
Annual demand for housing is estimated at over 300,000 units, with supply coming in at less than half of this figure.
Apart from Shelter Afrique,
Management of the lender said it was in the process of signing more loans that will see its borrowed funds grow to Sh2.2 billion by end of year. Rafiki has a deposit base of Sh1.7 billion.
Most banks do not offer fixed rates, exposing homeowners to fluctuations in monthly repayments as was the case in the period 2010-2012 when interest rates shot up. Banks attribute the high cost of mortgage loans to lack of long-term funds as most of their customers hold money with them for short periods.
In December it received a Sh436 million loan for onward lending to 4,000 micro-borrowers. The lender also issued a Sh3.5 billion corporate bond that was oversubscribed by 43 per cent with a greenshoe option allowing it to absorb Sh5 billion.
The bond paid investors a fixed rate of return at 12.5 per cent or a floating rate pegged on the 182-day Treasury bill rate with a margin of 1.5 per cent.
Microfinance banks have had to entice savers with higher rewards than those of banks to attract deposits, putting them at a disadvantage in pricing of their loan products.
This has made borrowing more costly. Faulu Kenya and
Rafiki is fully owned by
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