KCB Bank has announced the launch of a transformative mortgage solution designed to unlock home ownership for Kenya’s informal sector, marking a significant step towards supporting the affordable housing agenda.
Single-digit interest rate
With a single-digit interest rate, the new offering is tailored to SMEs, artisans, boda boda operators, players in the gig economy, as well as digital content creators whose income streams may be irregular but consistent and have historically faced barriers in accessing mainstream mortgage financing options.
Who qualifies?
To qualify for the facility, an individual must have operated a business for at least 2 years. The mortgage loans range from KShs. 1 Million to KShs. 4 Million, with a maximum repayment maximum period of 15 years.
Speaking during the launch, KCB Bank Kenya Director of Mortgage Business, Caroline Wanjeri, noted that the new product reflects KCB’s commitment to supporting Kenya’s evolving workforce landscape.
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“For years, Kenya’s mortgage uptake has been concentrated among formally employed and middle to high-income earners, a scenario that has kept the mortgage penetration levels at around 3%. With more than 80% of Kenya’s workforce operating in the informal sector, the new mortgage solution seeks to increase financial inclusion, ease the rigid credit assessment mortgage models and enable an increase in homeownership for Kenyans,” Wanjeri said.
The solution
Unlike conventional mortgage products that rely heavily on formal payslips and employer contracts, KCB’s new solution leverages transactional history, mobile money flows, business records, savings patterns, and alternative data to assess affordability and repayment capacity
“This solution acknowledges that Kenya’s economy runs on enterprise. By combining alternative credit assessment and financial discipline, we are making mortgage financing accessible by redefining eligibility through consistency in business performance as a credible pathway to dignified home ownership,” Wanjeri added.
With an annual urban growth rate of 4.4%, Kenya faces a significant housing backlog that continues to adversely impact the health and well-being of low-income households. Kenya’s Vision 2030 Third Medium Term Plan (MTP III) 2018-2022 highlights affordable housing as a crucial element to the realization of inclusive growth that is capable of supporting the development of a sustainable future.
The realization has however, been hindered by a constrained flow of investment finance to the sector, increased costs of construction for developers, as well as diminished affordability levels for customers throughout the housing and demand value chain. This timely structural intervention will therefore help to unlock the much-needed long-term capital for the ordinary Kenyan to own a home.
