Lenders tighten mortgage loans tap amid ballooning bad loans

Development Bank of Kenya registered the biggest drop in mortgage loans at 84 per cent in 2025. [Courtesy]

Mortgage accounts with more than one missed payment more than doubled in 2025, pointing to the financial strain a majority of Kenyans are experiencing amid prevailing economic conditions.

The latest statistics from the banking regulator show a 105.8 per cent increase in the number of mortgage accounts classified as non-performing loans (NPLs).

This helps explain why major lenders slowed home-loan growth during the period, led by the largest mortgage generator, KCB Bank.

This is despite the Bank Supervision Annual Report 2025 showing a 2.4 per cent increase in the number of mortgage accounts.

The report by the Central Bank of Kenya (CBK) shows mortgage accounts stood at 30,726 in 2025 compared to 30,016 a year earlier.

The number of mortgage accounts first crossed the 30,000 mark in 2024. According to the report published in September, the number of mortgage accounts classified as NPLs closed the period at 8,916 compared to 4,332 in 2024. This is more than double, an increase of 105.8 per cent.

The value of mortgages classified as NPLs increased by 9.2 per cent from Sh46.0 billion in 2024 to Sh50.3 billion.

Overall, however, the size of NPLs in the banking sector reduced.

“The stock of NPLs decreased by 0.1 per cent to Sh696.9 billion in December 2025 from Sh697.3 billion in December 2024,” the report says.

The report says that the non-performing mortgage loans to gross mortgage loans ratio was 16.3 per cent in December 2025, as compared to 16.5 per cent in December 2024.

“The ratio was above the industry gross NPLs to gross loans ratio of 16.0 per cent in December 2025, and below the industry gross NPLs to gross loans ratio of 17.1 per cent in December 2024,” the report notes.

These figures then explain why major lenders somehow slowed down in issuing new home loans in the period, signifying the sector’s strain amid ballooning NPL ratios.

The biggest drop was registered by Development Bank of Kenya Ltd, whose mortgage accounts dropped 84 per cent in the period. This is from 696 in 2024 to 114 in 2025.

This is followed by Guardian Bank Ltd, which registered a 58 per cent drop, from 89 mortgage accounts in 2024 to 37 in 2025 and Premier Bank Kenya that recorded a 55 per cent drop from 105 mortgage accounts to 47 in the same period.

Other banks that slowed down in generating new mortgages are I&M, DIB Bank, Paramount Bank Ltd, Bank of India, Victoria Commercial Bank, Middle Eastern Bank, Credit Bank, SBM, National Bank, Standard Chartered, HFCB, and KCB.

KCB, which is the largest bank by asset size in the country, slashed its number of mortgages by nine per cent, from 8,791 to 8,038.

The bank’s value of outstanding mortgages, which stood at Sh91.5 billion in 2024, closed 2025 at Sh102.0 billion. Its NPLs in the mortgage sector closed 2025 at Sh22.2 billion, up from Sh21.4 billion.

The bank’s mortgage accounts classified as NPLs grew from 618 to 5,556 in the period under review, a growth of 800 per cent.

Equity Bank, a fierce competitor to KCB, also slowed in taking in more home loans as the number of mortgage accounts dropped six per cent to 1,585 from 1,686. Even so, the bank’s value of mortgage loans classified as NPLs grew from Sh1.4 billion to Sh1.8 billion.

The bank’s number of mortgage accounts classified as NPLs also increased to 247 from 216.

Absa Bank, however, dropped its number of mortgage accounts classified as NPLs from 695 to 447. This is even as the bank’s value of mortgage loans classified as NPLs grew from Sh2.4 billion to Sh5.3 billion.

Absa is one of the banks on the list that grew its mortgage accounts, rising from 2,245 to 3,450.

The highest growth in the number of new mortgages, contributing to the 30,726 mortgage accounts, was attributed to Sidian Bank. The bank recorded a 2,550 per cent growth in mortgage accounts from six in 2024 to 159 in 2025.

This was followed by African Banking Corporation, with a 283 per cent growth from 12 to 46 mortgage accounts and Bank of Africa coming third with a 136 per cent increase to 229 accounts.

Consolidated Bank increased its mortgage accounts by 110 per cent to 393, Kingdom Bank by 90 per cent to 169, Family Bank by one per cent to 980, DTB by 13 per cent to 99, and Co-operative Bank by six per cent to 2,725, while Ecobank retained its 70 mortgage accounts unchanged.