National Treasury grants mortgage company Sh603 million for housing expansion

Kenya Mortgage Guarantee Trust Receives Funding to Boost Affordable Housing for Underserved Workers

The Kenya Mortgage Guarantee Trust (KMGT) is set to support affordable housing for underserved and informal sector workers, thanks to an initial capitalization of approximately Ksh 603.1 million from the Kenyan National Treasury.

By providing partial risk cover (credit guarantees), KMGT aims to de-risk lending to these typically excluded groups, enabling financial institutions to extend mortgages to borrowers with irregular incomes or informal employment. This initiative is a crucial step towards financial inclusion and scalable housing finance solutions.

The role of KMGT in de-risking lending works through several mechanisms. They offer guarantees that absorb some of the credit risk for lenders, making them more willing to lend to informal sector workers and small business owners. KMGT also bridges lending gaps by covering borrowers who lack traditional income verification, thereby increasing inclusivity in mortgage financing. Lastly, they encourage lenders to extend credit beyond conventional clientele, thereby expanding home ownership for underserved populations.

KMGT operates in conjunction with the Kenya Mortgage Refinance Company (KMRC), which mobilizes concessional funding blended with domestic bonds to provide long-term, low-interest mortgage refinancing. Together, they deepen market liquidity, enhance affordability, and incorporate informal sector workers into formal housing finance markets.

The funding received by KMGT will be used to offer refinanced mortgages at single-digit interest rates, scale refinancing capacity, and expand access to home loans for underserved populations. This aligns with the government's commitment to innovative and catalytic financial instruments that complement traditional budgetary housing programs.

John Mbadi, the Cabinet Secretary for Treasury, emphasized the need for sustainable housing finance to embrace innovation and catalytic financial instruments. He pledged to mobilize more concessional funding for KMRC from development partners, such as the World Bank and AfDB, which have already provided $300M in concessional funding to KMRC with Treasury support.

The 2025/26 financial year budget will allocate Sh120.2 billion for housing and settlement, reflecting the government's commitment to addressing Kenya's rapid urbanisation rate of 4.3% per year, where only 2% of households hold mortgages, with the majority renting in informal settlements.

The growing global interest in scalable, sustainable housing solutions was reflected in the participation of international guests from Tanzania, Uganda, India, Pakistan, and Malaysia at the event celebrating the capitalization of the Kenya Mortgage Guarantee Trust. KMGT's CEO, Johnstone Oltetia, celebrated the Treasury's support and reiterated the value of blended finance in housing delivery.

In conclusion, the Kenya Mortgage Guarantee Trust acts as a critical financial intermediary that mitigates lending risks for banks and other lenders, thereby unlocking access to affordable housing finance for Kenya's underserved informal sector and small business workers. This initiative is a step forward in achieving financial inclusion and scalable housing finance solutions, in line with the government's strategies focused on innovation and sustainable housing.

[1] Kenya Mortgage Guarantee Trust (KMGT) - https://www.kmgt.co.ke/ [2] Kenya Mortgage Refinance Company (KMRC) - https://www.kmrc.co.ke/ [3] National Treasury - https://www.treasury.go.ke/ [4] Finance Act 2025 - https://www.parliament.go.ke/bill/2025/Finance-Act.html [5] CS John Mbadi - https://www.treasury.go.ke/cabinet-secretary/john-mbadi/