As of December 2021, Kenyans had shunned mortgages, with the number of home loans dropping to 26,723, a decline of 248 mortgage loans compared to 26,971 in 2020, according to the Central Bank of Kenya (CBK).
The 2021 Residential Mortgages Market Survey attributed the decline to a higher number of mortgage loans repaid compared to new mortgage loans granted in the year.
Despite the government's affordable housing program, which aimed to build over 500,000 low-priced houses by end of June 2022, the number of mortgages has cumulatively dropped by 1,270 in three years from 2019.
The effects of Covid-19, high property purchase costs, limited access to affordable long-term financing, and low income levels have discouraged the growth of mortgages, according to the survey.
High incidental costs such as legal and valuation fees and stamp duty have also contributed to the decline in mortgage uptake.
However, the value of mortgage loans outstanding rose to Sh245.1 billion in December 2021 compared to Sh232.7 billion in December 2020, an increase of Sh12.4 billion or 5.3 per cent.
Eight financial institutions control 84 per cent of the mortgage market, with seven large banks, led by KCB, controlling close to three-quarters of the mortgage market by end of December 2021.
Investors are banking on mass vaccinations against Covid-19 and the implementation of the affordable housing program under the Big Four agenda to boost the real estate market.
Infrastructural developments and funding from the Kenya Mortgage Refinance Company (KMRC) are also expected to encourage people to move to locations with affordable houses, thus giving the sector a big boost this year.
Outgoing KCB Group Chief Executive Joshua Oigara noted that the challenge in the affordable housing market is a supply shock, with many low-cost housing projects not coming up as fast as desired.
