**KMRC’s Sh3b green bond clears the way for single-digit mortgages**
The Kenya Mortgage Refinance Company has taken a landmark step toward broadening access to affordable home ownership after its Sh3 billion sustainability bond attracted overwhelming investor interest and secured a listing on the Nairobi Securities Exchange.
The bond, which was oversubscribed, signals growing appetite among Kenyan institutional investors for fixed-income instruments tied to environmental and social outcomes. Proceeds will be channelled into refinancing mortgages extended by participating primary lenders under terms that align with green building standards, prioritising energy-efficient housing and developments in underserved areas.
KMRC, a government-backed entity established in 2018 with support from the World Bank and the African Development Bank, was created specifically to address one of Kenya’s most persistent economic inequalities: the near-impossibility of home ownership for middle- and lower-income earners. Mortgage penetration in Kenya stands at less than three percent of GDP, far below the African average and a fraction of the rates seen in developed economies.
High commercial interest rates, which have historically pushed mortgage costs above 14 percent annually, are the central obstacle. By providing long-term, lower-cost refinancing to banks and savings cooperatives, KMRC aims to create the conditions under which lenders can sustainably offer single-digit mortgage rates — a threshold experts consider the minimum necessary to meaningfully shift demand.
The NSE listing also enhances transparency and opens the instrument to a wider pool of investors, including pension funds seeking long-duration assets that match their liabilities.
Housing advocates cautioned that financing alone will not resolve the shortage, estimating Kenya’s annual housing deficit at roughly 200,000 units. They called on county governments to accelerate land titling and reform zoning regulations that continue to inflate construction costs in peri-urban areas where affordable housing is most urgently needed.
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