Kenya’s mortgage market expanded in 2025, with outstanding loans rising 10 percent to Ksh.307.2 billion, even as high property costs and limited long-term financing continue to constrain growth, according to the Central Bank of Kenya’s (CBK) annual Residential Mortgage Survey.
Outstanding mortgage loans climbed from Ksh.279.3 billion in December 2024 to Ksh.307.2 billion a year later, driven by new lending activity. The number of mortgages issued rose 2.5 percent to 30,762, while the average loan size grew from Ksh.9.0 million to Ksh.10.0 million.
Lending remains tightly concentrated. Nine institutions accounted for 90.6 percent of the mortgage market in 2025, seven large banks controlling 77.4 percent and two medium-sized banks holding 13.2 percent. This marked a shift from 2024, when eight large banks dominated with 81.6 percent, alongside just one medium-sized lender.
Bad Loans Tick Up
Non-performing mortgage loans rose from Ksh.46.0 billion to Ksh.50.2 billion year-on-year. Still, the non-performing loan ratio for mortgages edged down slightly to 16.3 percent from 16.5 percent — though it remained above the industry-wide NPL ratio of 16.0 percent.
Borrowers benefited from more favourable lending conditions in 2025. Average mortgage interest rates fell to 13.5 percent, down from 15.2 percent in 2024, with rates ranging between 7.5 percent and 19.6 percent. Fixed-rate mortgages also gained ground, rising to 24.3 percent of loans from just 14.1 percent the previous year, as variable-rate lending declined from 85.9 percent to 75.6 percent.
Banks also extended loan terms, with average maturity lengthening to 11.5 years from 11.1 years, while most lenders continued capping loan-to-value ratios below 90 percent of property value.
Affordability Still the Core Constraint
Despite improving terms, banks flagged the same structural barriers identified in 2024: low income levels, high property acquisition costs, and limited access to affordable long-term financing remain the biggest obstacles to mortgage market growth.
To address these constraints, banks proposed a range of measures, including:
- Tax incentives for developers of low-cost housing
- Faster digitalisation of land registry systems
- Reduced stamp duty for first-time buyers
- Stronger government implementation of affordable housing programmes
- Greater availability of low-cost housing units
- Expanded access to long-term funding through vehicles such as the Kenya Mortgage Refinance Company (KMRC)
- Improved land administration and titling systems
- Better infrastructure support from national and county governments
- Simplified legal and regulatory processes governing the mortgage sector
Source: Bank Supervision Annual Report 2025 (Residential Mortgage Survey), Central Bank of Kenya
