Lenders Urged To Consider Mpesa Records For Mortgages

By Suleiman Mbatiah

Kenyan lenders have been urged to use mobile-money transactions, SACCO savings, rent payments and business records to assess mortgage eligibility, in a proposed shift aimed at opening home loans to workers without regular payslips.

Housing Principal Secretary Charles Hinga said the traditional reliance on formal employment records shuts out traders, farmers, freelancers and small-business owners who may have steady incomes but find it hard to prove they can repay long-term loans.

Speaking at the opening of the fifth Kenya Affordable Housing Conference in Naivasha today, Hinga called for a common affordability framework that reflects how non-salaried Kenyans earn and spend. He also proposed a standardised affordable housing mortgage with common rules on eligibility, underwriting, documentation, valuation and servicing.

The proposals are meant to address a labour market where formal employment remains limited. Formal jobs account for about 15 per cent of employment in Kenya, according to the World Bank, leaving most workers outside the salaried records traditionally used by lenders.

Kenya’s mortgage market has grown slowly despite rising demand for housing. Central Bank of Kenya data show there were 30,016 mortgage accounts at the end of 2024, an increase of 756, or 2.6 per cent, from the previous year.

The value of outstanding mortgages rose by 3.3 per cent to KSh279.3 billion, while the average mortgage was KSh9 million. The average interest rate stood at 14.9 per cent, and about 85.9 per cent of mortgages had variable rates. Non-performing mortgages increased from KSh39.9 billion to KSh46 billion.

“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,” Hinga said.

The proposal did not set a deadline for reaching one million mortgages or say when lenders could begin using a common underwriting framework.

Hinga said the Boma Yangu housing platform, which has more than 1.29 million registered users, could be linked to lenders so prospective homeowners can move from registration and prequalification to allocation, financing and acquisition of title.

The financing push comes as the government steps up housing construction across the country. Hinga said more than 280,000 housing units were under construction, representing about KSh731.5 billion in contract value. More than 45,000 units valued at an estimated KSh52 billion are expected to be completed by December.

The figures add pressure on the government and financial institutions to make sure the homes are within reach of the households they are meant to serve.

“Ownership is not a single door. It should be a corridor with several doors, each opening onto the same outcome,” Hinga said.

A standardised mortgage could make it easier for lenders to pool and refinance home loans, according to Hinga. It could also help attract long-term capital from domestic institutional investors into housing.

Banks said expanding mortgage access would also require action on construction costs and the availability of serviced land.

KCB Kenya Director of Mortgage Business Caroline Wanjeri said limited development finance, rising building costs and a shortage of serviced land ultimately raise the prices paid by homebuyers. Her remarks were delivered by George Laboso, the bank’s senior manager for affordable housing.

“We are looking at the entire housing journey while seeking to make these solutions more accessible and responsive to evolving customer needs,” Wanjeri said.

KCB called for greater use of alternative building materials to lower construction costs. The bank said affordability assessments should also take into account access to transport, water, sanitation and other essential services because these affect the total cost of living in a home.

Shelter Afrique Development Bank Managing Director and Chief Executive Thierno-Habib Hann said conventional housing finance models often assume formal employment, reliable land records and access to long-term funding, conditions that do not reflect many African economies.

More than 80 per cent of employment in Africa remains informal, according to the World Bank. Hann called for alternative underwriting, blended finance, capital-market instruments, green housing finance and digital services to widen access to housing.

Kenya Mortgage Refinance Company Chief Executive Johnstone Oltetia said the housing industry must increase the supply of affordable homes while also widening access to the financing needed to buy them.

“Let this be the conference where we stop measuring housing by what we plan, and start measuring it by what we deliver,” Oltetia said.

The two-day conference, themed “Scaling the Base: Unlocking Inclusive and Sustainable Housing Solutions,” has brought together government officials, banks, SACCOs, developers, development finance institutions and housing specialists. It ends on Friday.