By Robai Ludenyi
Kenya’s mortgage market recorded its strongest growth in years in 2025 as falling interest rates encouraged more homebuyers to take up larger loans and spread repayments over longer periods.
The value of outstanding mortgage loans increased by Sh27.9 billion per 10 per cent, to reach Sh307.2 billion in 2025. This was an increase from Sh279.3 billion recorded in 2024, according to data from the Central Bank of Kenya.
The cost of borrowing has been coming down, giving some households more room to consider buying homes through bank financing. Average mortgage interest rates dropped from 15.2 per cent in 2024 to 13.5 per cent in 2025. Although the reduction may appear small, the lower rates can make a significant difference to borrowers who are repaying large loans over many years.
At the same time, the average size of a mortgage increased from Sh 9 million to Sh10millionduring the year. This means that the increase in the total value of mortgages was driven partly by borrowers taking larger amounts to finance their homes. The number of mortgage facilities also went up, although by a smaller margin. There were 30,762 mortgage facilities in 2025**, an increase of 746 from the previous year.
The figures show that Kenya’s mortgage market is expanding, but the growth is not only coming from an increase in the number of people taking home loans. The larger value of individual mortgages is also playing an important role.
For prospective homeowners, lower interest rates can reduce the amount paid in interest over the life of a loan. However, the final cost of a mortgage still depends on factors such as the loan amount, repayment period and the interest rate offered by the lender.
The longer repayment periods being offered by some lenders are also making it possible for borrowers to manage larger loans through smaller monthly payments. However, extending the repayment period can also mean paying interest for a longer time.
By Robai Ludenyi
Banks and mortgage finance companies have traditionally faced challenges in expanding home lending because of high interest rates, limited access to long-term funding and the high cost of property.
The decline in mortgage rates in 2025 therefore provided some relief to borrowers and helped improve conditions in the housing finance market. The increase in lending also points to continued demand for home ownership despite the financial challenges facing many households.
However, borrowers still need to consider their ability to make regular repayments before taking on a mortgage. A lower interest rate does not remove the need to carefully assess income, loan terms and the total amount that will eventually be paid.