Saccos struggle to lend mortgages as loans drop by Sh2.7 billion

Saccos still struggle to sell mortgages as a key product offering, despite land and housing taking the largest share of lending.

The Sacco Societies Regulatory Authority (SASRA) notes this difficulty in its latest industry report, which shows a drop in the amount of lending done outright as mortgage finance last year.

This amount shrank by more than 25 per cent in the period, the second-largest dip across all sub-sectors listed in the document.

Disbursements to social and communal expenses shrank the most, down 39.3 per cent, followed by mortgage finance at 26.75 per cent and crop farming at 20.84 per cent.

The Sacco Supervision Annual Report, 2025, published by SASRA, shows Saccos disbursed Sh7.47 billion in the period as mortgage finance, which was a drop compared to Sh10.2 billion in 2024.

In 2023, this figure stood at Sh3.82 billion.

For this reason, the proportion of mortgage finance against total disbursed loans has fluctuated from 0.83 per cent in 2023 to 1.88 per cent in 2024 before settling at 1.25 per cent in 2025.

“It is also observed that while trade and building were booming, the finance, investment, and insurance sector took a hit, shrinking by 8.06 per cent in 2025. This decline was driven by the microfinance sub-sector, which dropped by 15.73 per cent and mortgage finance, which also declined by a phenomenal 26.75 per cent,” reads the SASRA report.

The regulator traces some of the challenges associated with this growth to findings published in another report in October 2025, done in partnership with the Kenya Mortgage Refinance Company (KMRC).

The report, titled ‘Leveraging Sacco data and research to strengthen the financing of the affordable housing value chain by the Sacco sector,' notes that mortgages were found to be more popular among younger members aged between 36 years and 45 years.

Those aged 46 years and 55 years were found to mostly have general development loans, with a majority of borrowers for land and housing projects being male, aged between 36 years and 55 years, with over 70 per cent earning Sh100,000 or less.

“The report further observes that there was a clear need for development of products that match borrowers' repayment capacity while satisfactorily addressing their housing finance needs,” the report says.

Sasra notes that findings of the October research revealed that members of Saccos were using a wide range of loan products to finance their land and housing needs, but the development loan products still dominated due to their role as a flagship loan product among Saccos, their flexibility, and lower incidental costs.

“The traditional mortgage as a loan product is a new phenomenon to Saccos’ loan product offering, and therefore its uptake is not yet entrenched in the Sacco credit offering, but its uptake was noted to be gradually increasing driven by their longer tenors and lower pricing supported by the KMRC wholesale refinancing,” the regulator says.

According to the report, the total amount of loans disbursed in 2025 was Sh596.54 billion, a growth from Sh542.75 billion in 2024, and Sh460.47 billion in 2023.

Of this amount, the total lending under land and housing in the period was Sh157.2 billion. This is a growth from Sh137.12 billion in 2024 and Sh126.11 billion in 2023.

The report states that land and housing, as an economic sector, continues to take the lion’s share for Sacco borrowers’ needs.

“Loans and credit facilities to the land and housing sector accounted for the largest share of lending, amounting to Sh157.20 billion, which represents 26.35 per cent of the total loan disbursed in 2025,” the report says.

Sasra says this growth reflects a significant increase from Sh137.12 billion, representing 25.26 per cent recorded in 2024, which underscores the sustained preference for real estate-related financing within the Sacco sub-sector.

In 2023, the amount disbursed for land and housing needs was Sh124.19 billion, representing 26.97 per cent.

The regulator says the growth witnessed in the period was consistent with the Economic Survey Report 2026, which indicates that the construction sector expanded by 6.8 per cent in 2025, a significant improvement compared to 0.7 per cent growth in 2024.

“This growth was primarily driven by increased civil works, particularly the development of residential buildings, which in turn stimulated demand for financing from Saccos,” the report says.