Kenya Sees Rise in Mortgage Uptake as Home Loan Rates Drop

Mortgage uptake in Kenya is increasing, particularly among middle-income earners, thanks to more affordable and extended home loan options facilitated by the Kenya Mortgage Refinance Company (KMRC).

Addressing Barriers to Homeownership

Johnstone Oltetia, KMRC CEO, highlighted that collaboration between government agencies, banks, Saccos, and developers is tackling persistent challenges such as high funding costs, land titling issues, and the shortage of affordable housing.

• KMRC offers low-cost liquidity to lenders, enabling home loans at interest rates as low as 8.9% through commercial banks and 7% via select Saccos.
• Loan repayment periods have been extended from an average of 8.9 years to between 20 and 25 years, reducing monthly installments and broadening access.
• Borrowers can repay loans early without penalties.
• KMRC promotes fixed-rate financing to protect borrowers from fluctuating variable interest rates common in traditional mortgages.

Boosting Housing Supply and Financing

KMRC acts as a financial intermediary supporting the purchase of newly constructed homes. Currently, about 280,000 housing units are under development nationwide, with KMRC having refinanced over 6,000 affordable home loans across 39 counties.

The company has mobilized a capital pool of Sh30 billion, including a Sh3 billion sustainability bond, ready for deployment as new housing projects come to market. The average KMRC-backed loan is Sh4.2 million, targeting lower- and middle-income buyers rather than the high-end market.

Innovations in Mortgage Eligibility

To expand access, lenders are encouraged to incorporate alternative data sources such as mobile money transactions, Sacco savings, rental and utility payment histories, and business records to assess creditworthiness, especially for informal sector workers.

Government and Industry Perspectives

Principal Secretary Charles Hinga emphasized the importance of developing standardized affordable housing mortgages with common eligibility and underwriting criteria to attract long-term capital and increase homeownership.

KCB Bank and Shelter Afrique leaders highlighted the need to consider the entire housing ecosystem, including infrastructure and informal employment realities, urging innovative financing solutions tailored to African contexts.

These combined efforts aim to increase mortgage penetration from the current estimated 30,000 to one million, enabling more Kenyans to own homes.