The value of outstanding mortgages issued by local banks rose by 5.3 percent in the year ended December 2021, defying a decline in the number of active homeownership accounts due to lenders issuing larger amounts per loan to borrowers.
The 2021 bank supervision annual report published by the Central Bank of Kenya (CBK) shows that outstanding mortgages totalled Sh245.1 billion by December 2021, up by Sh12.4 billion during the year.
At the same time, the number of mortgage accounts shrunk by 228 to 26,723 during the year, attributed by the regulator to a higher number of mortgage loans that were repaid as compared to the number of new mortgage loans granted in the year.
The average mortgage loan size also increased from Sh8.6 million in 2020, to Sh9.2 million last year.
“The value of mortgage loans outstanding was Sh245.1 billion in December 2021, as compared to Sh232.7 billion in December 2020. The increase was due to higher values of mortgages granted in 2021,” said CBK.
The regulator however expressed concerns that the uptake of mortgages is still low, despite the estimated annual demand of 200,000 housing units in the country.
Kenyans have traditionally shunned mortgages due to concerns over varying and high-interest rates.
Lenders have also been wary of committing to long-term mortgage contracts that are financed using short-term customer deposits.
In a bid to address this mismatch and encourage more home loan uptake, the Treasury in 2019 launched the Kenya Mortgage Refinance Company (KMRC) to derisk home loans for workers and offer stable, long-term funds to financial institutions for on-lending to home buyers.
Last year, the average rate for a mortgage stood at 11.3 percent compared to 10.9 percent in 2020, in line with the general rise in loan rates in the period.
Under the KMRC refinancing plan, funds that are on-lent to banks and other financial institutions at five percent interest, allow them to offer their customers long-term mortgages at single-digit, stable interest rates.
