HF Group to Offload Sh50bn Mortgage Book

Mortgage lender HF Group is seeking to offload its entire home-loans portfolio to raise cash for a fresh push into low-cost housing lending, chief executive officer Sam Waweru has said.

The company plans to sell its existing loans to the soon-to-be-founded Kenya Mortgage Refinance Company, which will lend banks and saccos cash to extend inexpensive mortgages to low-income earners.

The planned sale will free up capital that will enable HF Group to build a new loan book that mainly focuses on the affordable homes market segment.

“We can release, off the top of my head, about Sh50 billion from our book,” Mr Waweru told Bloomberg on Friday.

“That would mean we can lend another Sh50 billion to the economy immediately. We’ll bundle together the mortgages we have written over the years.”

The mortgage financier plans to provide home loans of as low as Sh2.5 million for about 200 new housing units over the next 12 months.

HF Group’s home-loans portfolio growth slowed by 9 per cent last year as the limits on interest rate charges took hold, elections slowed down activity, and the failure of three banks in 2016 caused credit demand to slow, according to the firm’s annual report.

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HF Group, Mr Waweru said, is helping the government to set up the Kenya Mortgage Refinance Company – which is expected to be operational by the end of the year.

The government will inject Sh1.5 billion into the company in exchange for a 20 per cent stake, while the balance will be held by commercial banks, credit unions and development finance institutions.

The World Bank will provide Sh16 billion in financing to the company, which will issue bonds to investors to fund its loaning.

“The benefits will start accruing in early 2019 and into the future.” Mr Waweru said, adding that the local housing market has been ready for mortgage-backed securities.

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