The average mortgage size dropped for the first time in seven years last year with Kenyans taking houses of lower value in line with prevailing tough economic conditions.
The Central Bank of Kenya (CBK) data shows the mean home loan fell to Sh9 million from Sh9.4 million in 2023 as the number of mortgages rose by 756 to 30,016 accounts.
The value of mortgage loans issued went up to Sh279.3 billion as at December 2024 from Sh270.4 billion a year earlier with growth attributable to new loans issued during the 12-month period. Average price charged on mortgages was 14.9 per cent.
“The average loan maturity was 11.1 years with a minimum of 5.3 years and a maximum of 18 years in 2024, as compared to an average loan maturity of 11.7 years with a minimum of five years and a maximum of 18 years in 2023,” said CBK in its Annual Supervision report for the year 2024
“This is an indication that banks decreased the maturity period of mortgage in 2024,” added the regulator.
At 14.9 per cent, those borrowing Sh9 million for 11 years will need to pay Sh139,017 per month and Sh120,105 if the mortgage runs for 18 years.
This makes it difficult for people earning less than Sh300,000 monthly to qualify given the statutory requirement to retain a third of the pay after all deductions. “Banks identified low level of income, high cost of property purchase and limited access to affordable long-term finance as the major impediments to the growth of their mortgage portfolios,” said CBK.
The government has introduced an affordable-housing project, which aims to put 250,000 quality and lower priced units to the market each year to help more Kenyans achieve the dream to own a home.
The pace of completion of the homes has, however, been slow with uncertainty on the number of units completed with the government claiming 140,000 houses have been constructed in the last two years.
Kenya Mortgage Refinance Company (KMRC) was formed by the state to supply the market with long term affordable funds to lend to home buyers. Uptake of funds from KMRC has also been slow with seven banks borrowing from the fund in 2024, the same number of institutions as 2023. The seven had borrowed Sh10 billion at the end of 2024 compared to Sh7.9 billion in December 2023.
Home buyers serviced their loans better than other borrowers with non-performing mortgage loans at Sh46 billion, being 16.5 per cent of total borrowing. This was lower than the gross non-performing loans ratio of 17.1 per cent signalling the commitment that home owners put on honouring their obligations.
