•Mortgage financing has been low in the country despite Kenyan towns recording some of the highest rural to urban migration.
•Despite the increasing number of mortgage accounts, the mortgage to GDP ratio stood at 1.6 per cent in 2022, indicating significant potential for growth in the mortgage market.
Image: HANDOUT
Kenya Mortgage Refinance Company (KMRC) now wants a review of the regulations to include non-member financial institutions and non-salaried Kenyans with consistent income into the mortgage bracket.
KMRC chief executive officer Johnstone Oltetia says this is part of the measures aimed at strengthening the institution to increase uptake of mortgage in the country.
KMRC currently works with designated or Participating financial institutions like banks and Sacco’s, However should the changes be effected financial institutions that are not KMRC members will be able to receive funds for onward lending.
“But essentially we are travelling up so that we can start refinancing including non-participating financial institution. We have seen it will be necessary to extend the scope of lending to include non-shareholders that way we have a wider number of Kenyans who will be able to access loans,” said Oltetia.
He added that there should also be a way to bring in non-salaried Kenyans that have an income which can be tracked over a period of time.
Mortgage financing has been low in the country despite Kenyan towns recording some of the highest rural to urban migration.
According to Central Bank’s Supervision Annual Report 2022, which is the latest release that captures mortgage-financing landscape in the country, there were 27,723 mortgages in the market in 2022, with KMRC refinancing 2,522 of them.
The total number of mortgage accounts increased by 1,063 in 2022, a 4.0 per cent rise from 26,723 in 2021.
Over the past decade, the average number of loan accounts has shown a Compounded Annual Growth Rate (CAGR) of 4.1 per cent, reflecting a growing demand for homeownership among Kenyans, spurred by an expanding middle class and rising rates of population growth and urbanisation.
Despite the increasing number of mortgage accounts, the mortgage to GDP ratio stood at 1.6 per cent in 2022, indicating significant potential for growth in the mortgage market.
Oltetia was speaking during the unveiling of a month long financial sensitisation program dubbed 'Chora Plan' (Plan Your Money) campaign by the Kenya Bankers Association (KBA).
The event that brought together top finance sector players called for enhanced financial literacy as the key to ensuring financial sustainability and the country's economic growth.
CBK Governor Kamau Thugge said that the campaigns will promote financial literacy and inclusion, essential for individual and national economic stability.
"Equipping Kenyans with financial knowledge and skills empowers individuals and businesses, laying a foundation for a resilient economy," said Thugge.
Kenya currently has one of the lowest financial literacy levels when compared in terms of the savings culture.
Studies have shown that there is a direct co-relation between financial literacy and levels of savings.
According to a 2021 Global Financial Literacy Survey, only 38 per cent of Kenyans are financially literate, this compares to 40 per cent in Tanzania and 42 per cent in South Africa.
“Our savings rate lag at 13 percent of which is far below the Africa average of about 17 percent. This program is a transformative step towards creating a financially literate society.”
“By focusing on practical financial education in areas such as banking, insurance and pension services, we can help individuals and businesses make better financial decisions that benefit them and the broader economy,” said KBA Chairman & NCBA Group MD John Gachora.