Johnstone Oltetia, Kenya Mortgage Refinance Company (KMRC) Chief
Executive Officer and Managing Director speaks at the 5th Affordable Housing
Conference./HANDOUT.
Mortgage uptake among middle-income Kenyans is rising as lenders offer cheaper, longer-term home loans, according to Kenya Mortgage Refinance Company (KMRC) chief executive officer and managing director Johnstone Oltetia.
Speaking at the 5th Affordable Housing Conference, Oltetia said growing collaboration among government agencies, banks, Saccos and developers is helping address long-standing challenges in the housing market.
This includes high funding costs, land titling issues and a shortage of affordable housing units.
He said KMRC is addressing three key barriers that have historically restricted homeownership in Kenya: high interest rates, short repayment periods and exposure to variable rates.
“KMRC provides low-cost liquidity to primary lenders, enabling them to offer home loans at 8.9 per cent through commercial banks and 7 per cent through select Saccos,” he said.
Oltetia said repayment periods have also been extended significantly. Before KMRC was launched in 2020, the average home loan tenure in Kenya was 8.9 years, resulting in high monthly repayments that put homeownership beyond the reach of many households.
He said repayment periods have now been extended to between 20 and 25 years, lowering monthly instalments and enabling more families to qualify. Borrowers can also clear their loans early without incurring additional charges.
Fixed-rate financing is another area KMRC is seeking to address.
“About 90 per cent of traditional Kenyan mortgages feature variable interest rates, exposing buyers to sudden payment increases when market conditions fluctuate. KMRC provides fixed-rate financing over the entire loan period to help families budget safely and avoid default,” he said.
Oltetia said KMRC serves as a financial bridge between homebuyers and newly constructed housing units across the country.
While the government and private developers are driving the supply side, with about 280,000 units currently under development nationwide, KMRC provides off-take financing that enables citizens to purchase completed homes.
Over the past five years, KMRC has refinanced 6,145 new affordable home loans across 39 counties, with plans to expand to all 47 counties as regional housing developments are completed.
“To date, KMRC has disbursed Sh32 billion through partner financial institutions. The company has also mobilised an additional Sh27 billion alongside a Sh3 billion sustainability bond, creating a Sh30 billion capital pool ready for deployment as new housing supply comes onto the market,” he said.
The average KMRC-backed home loan currently stands at Sh4.2 million, with a maximum loan ceiling of Sh10.5 million, highlighting the company’s focus on lower- and middle-income earners rather than the high-end market.
“People actually need to know that there is affordable funding that can help them to off-take affordable housing,” Oltetia said. “They don’t need to wait to own homes. They need to own homes now.”
Kenya is seeking to build a more inclusive mortgage market through partnerships across the housing value chain. This will require lenders to rethink how they assess mortgage eligibility, including the use of alternative data such as mobile-money transactions, Saccos savings, rental payment histories, utility payments and business transactions to assess borrowers who lack conventional payslips or formal income records.
Principal Secretary for Housing and Urban Development Charles Hinga said Kenya currently has more than 280,000 housing units under construction, representing approximately Sh731.5 billion in contract value and supporting more than 640,000 direct and indirect jobs.
More than 45,000 units are expected to be completed by December at an estimated cost of Sh52 billion.
However, Hinga said the number of homes built should not be the ultimate measure of success.
“Ownership is not a single door. It should be a corridor with several doors, each opening onto the same outcome,” Hinga said.
The PS noted that traditional mortgage lending has generally favoured borrowers with regular salaries, formal employment records and predictable monthly incomes.
“This leaves a large section of Kenya’s working population, including traders, small-business owners, farmers, freelancers and other self-employed people, facing difficulties demonstrating their ability to repay long-term housing loans,” he said.
Hinga called for the development of a standardised affordable housing mortgage, with common requirements covering eligibility, underwriting, documentation, valuation and servicing.
He said such standardisation could make it easier for mortgages to be pooled and refinanced while attracting more long-term domestic institutional capital into the housing sector.
The PS also proposed a common affordability framework that recognises how non-salaried Kenyans earn and spend, including the use of mobile-money records, Sacco savings, rental histories, utility payments and business transactions in determining creditworthiness.
With more than 1.29 million Kenyans registered on Boma Yangu, Hinga said the platform could also be integrated with lenders to allow prospective homeowners to move more seamlessly from registration and prequalification to allocation, financing and eventually acquisition of title.
“The goal is to move Kenya from approximately 30,000 mortgages towards one million by building not only houses, but the market that places Kenyans inside them,” he said.
Financial institutions say expanding mortgage access cannot be addressed separately from the cost of developing homes.
According to George Laboso, Senior Manager, Affordable Housing at KCB Bank, constrained investment finance, rising construction costs and limited supply of serviced land are pressures that ultimately affect what homebuyers pay.
He said the role of financial institutions is consequently evolving beyond simply financing completed houses.
“We are looking at the entire housing journey while seeking to make these solutions more accessible and responsive to evolving customer needs,” Laboso said.
According to KCB, affordability should also take into account whether developments are connected to transport, water, sanitation and other essential services, as these costs directly affect what households ultimately spend to live in their homes.
The challenge extends beyond Kenya.
Shelter Afrique Development Bank managing director and CEO Thierno-Habib Hann said conventional housing finance models often assume formal employment, reliable land records, long-term funding and mature financial markets. These conditions, he said, do not reflect the realities of many African economies.
With more than 80 per cent of Africa’s workforce earning within the informal economy, Hann noted that housing finance needs to be designed around how people actually earn, save and live.
He called for a combination of blended finance, alternative underwriting, capital-market instruments, green housing finance and digital solutions to expand the pool of people who can access homes.
