Recent data from the 2023/24 Kenya Housing Survey shows that only 26 percent of urban households own their homes, while the majority—over 70 percent—rent, often in informal or insecure arrangements. In rural areas, homeownership is higher at 88 percent.
Reliance on informal tenure, personal savings, or incremental self-building leaves many vulnerable to rising rents and inadequate housing conditions.
For too long, many Kenyans have been held back by myths and fears, believing that owning a home is simply out of reach. The reality is far more hopeful: with long tenors of up to 25 years and fixed, single-digit interest rates offered by Kenya Mortgage Refinance Company (KMRC) and available through banks and Saccos nationwide, the path to owning your own home is now affordable and available to all.
The most important factor in affordability is loan tenor which is the repayment period. To illustrate, consider a Sh2 million home loan at a fixed interest rate of 9.5 percent. Over a five-year repayment term, the monthly payment is approximately Sh42,000.
Stretching the repayment term to 10 years cuts that payment by half, to roughly Sh21,000 per month. This significant reduction transforms what once seemed impossible into a manageable monthly commitment.
The longer tenor creates room in household budgets for other essential expenses and cushions borrowers from financial shocks. This flexibility is essential because property prices in Kenya rise faster than average incomes. Waiting to accumulate a larger down payment or to find a “better time” to buy means paying much higher prices later.
Longer loan tenors therefore allow prospective homeowners to enter the market sooner and benefit from eventual property appreciation while avoiding future elevated property costs.
Longer repayment periods are more than just a mechanism for lowering monthly payments, they are a strategic tool that enables access to homeownership. Crucially, borrowers are not locked into the maximum term; they can prepay their loans ahead of schedule without incurring penalties.
This flexibility means that longer tenors serve primarily as entry points, opening the door to homeownership earlier rather than later, while allowing borrowers to accelerate repayment at their own pace as circumstances permit.
The second critical pillar of affordability is the interest rate. Over 85 percent of home loans in Kenya have variable rates, meaning your payments can rise unpredictably.
To further illustrate how interest rates play a critical role, take the same Sh2 million loans over 10 years at 16 percent interest means monthly payments of around Sh34,000 and those payments can increase as interest rates vary which is higher that Sh21,000 per month if the home loan is at a fixed rate of 9.5 percent.
The variable rate home loans, which are volatile in nature, introduce uncertainty and financial burden. As a result, they complicate household budgeting and increase the likelihood of default, which is costly for both borrowers and lenders.
KMRC-backed home loans break this cycle. This stability means borrowers know exactly what they owe each month, allowing for better financial planning and peace of mind.
The path to homeownership hinges on two crucial factors: longer loan tenors and stable, affordable interest rates. Extending repayment periods to 25 years makes monthly payments manageable, while fixed, single-digit interest rates provide the certainty families need to plan and avoid financial shocks.
Together, these two factors: longer tenors and single-digit fixed interest rates are transforming access to homeownership especially middle- and lower-income earners.
The writer is Chief Executive Officer & MD, Kenya Mortgage Refinance Company
