Kenya is considering changes to conventional mortgage assessment practices to expand access to housing finance for individuals who earn income outside formal employment. The proposed approach would allow lenders to consider alternative financial information, including mobile money transactions, SACCO savings, rental payment records, utility bills and business transactions when assessing potential borrowers.
The initiative seeks to address a structural challenge within Kenya’s mortgage market, which has traditionally favored salaried workers with predictable monthly incomes and formal employment documentation. Many traders, farmers, freelancers, small-business owners and other self-employed individuals generate regular income but may struggle to meet conventional mortgage requirements because their earnings do not follow a fixed monthly pattern.
The use of alternative financial data could allow lenders to assess borrowers based on their actual financial activity rather than employment status alone. Mobile money platforms, in particular, generate transaction histories that can provide information on income patterns, spending behavior and cash-flow consistency.
For individuals with irregular income, this information could help lenders develop a more comprehensive picture of repayment capacity. SACCO savings records, rental payments, utility bills and business transactions could provide additional indicators of financial discipline and cash-flow management.
However, lenders would need to assess the quality and consistency of the data before incorporating it into credit decisions. Transaction volumes alone may not necessarily demonstrate a borrower’s ability to sustain long-term mortgage repayments, particularly where income fluctuates significantly.
The proposed changes come as the government seeks to increase home ownership alongside the development of affordable housing projects. Increasing the supply of housing units may have limited impact if prospective homeowners cannot secure suitable financing.
Expanding mortgage eligibility could therefore complement the government’s affordable housing agenda by increasing the number of households capable of purchasing homes. A broader mortgage market could also improve the absorption of affordable housing units and create additional demand for residential property.
Greater access to mortgage financing could generate activity across Kenya’s housing value chain. Developers could benefit from a larger pool of potential buyers, while construction companies, financial institutions and other housing-related service providers could experience increased demand.
The proposed reforms could also support the development of Kenya’s housing finance market. Standardizing affordable mortgage requirements around areas such as borrower eligibility, underwriting, documentation, valuation and loan servicing could make mortgage loans easier to pool and refinance.
A more developed mortgage market could, in turn, create opportunities for long-term institutional funding. Pension funds and insurance companies, which manage substantial pools of long-term capital, could potentially increase their exposure to housing finance through structures involving institutions such as the Kenya Mortgage Refinance Company (KMRC).
Greater use of alternative financial information will require appropriate safeguards. Lenders would need reliable data, clear consent mechanisms and strong privacy protections when accessing borrowers’ financial records.
Responsible lending will also remain important. A borrower’s transaction history may provide useful insights into cash flow but may not capture all factors affecting long-term repayment capacity. Lenders will therefore need to combine alternative data with other affordability and credit-risk assessments rather than relying on a single source of information.
The proposed shift towards alternative mortgage assessment reflects the changing nature of employment and income generation in Kenya. As more individuals operate businesses, freelance or earn income through informal channels, traditional salary-based lending criteria may exclude borrowers who could otherwise demonstrate the capacity to repay.
If implemented effectively, incorporating mobile money transactions and other alternative financial data could broaden access to mortgages while supporting demand for affordable housing. It could also deepen Kenya’s housing finance market and create opportunities across the real estate and investment sectors.
Ultimately, the success of the approach will depend on balancing greater financial inclusion with prudent lending and strong data governance. A mortgage system that recognizes diverse income patterns while maintaining sound credit standards could help connect more Kenyans to formal housing finance.
