Financing is one of the main drivers of Kenya’s property market. Simply put, without access to affordable credit, most people cannot buy homes.
Yet Kenya’s mortgage market is still underdeveloped. Housing finance reports show that only about 11% of Kenyans earn enough to qualify for a standard mortgage. In reality, even fewer people actually have mortgages.
This gap in financing affects buyers, developers, and the pace of housing growth in the country.
Because mortgages are already limited, interest rates have a big impact. Higher rates make it harder for people to qualify for loans. Lower rates can allow more buyers into the market, even if the drop is small.
So it’s no surprise that many are asking: will Kenyan mortgage rates fall in 2026?
READ ALSO: A Beginner’s Guide to Understanding Mortgage Loans in Kenya
Table of Contents
How Mortgage Rates Are Set
Mortgage rates in Kenya follow the Central Bank Rate (CBR), but banks add extra charges for risk, operations, and profit.
This means rates do not move automatically when the CBR changes. Banks wait to see how stable the economy is before lowering rates for borrowers.
What the Central Bank Is Saying
The CBK’s decisions are key. If inflation stays high or government borrowing is strong, the bank may keep rates steady.
Even if the CBK lowers rates, banks usually wait before passing the cuts on to mortgage borrowers.
Inflation Matters
Inflation affects interest rates. If prices rise quickly, borrowing costs stay high.
Even when headline inflation slows, banks also watch core inflation, currency stability, and future price trends. A short drop in inflation does not always mean cheaper mortgages.
What Banks Are Doing
Banks reveal intentions through actions more than announcements. Watch for:
- Changes in fixed-rate mortgage offers
- Shorter or longer fixed-rate periods
- Special promotions returning or disappearing
If banks see easing as temporary, rates may not drop much.
Government Borrowing and Treasury Yields
When government bonds and Treasury bills pay high returns, banks prefer lending to the government.
This can keep mortgage rates high, even if the CBR falls. For rates to drop, yields on government debt would need to fall too.
Global Conditions
Global interest rates, especially in the US, influence Kenya, but the effect is limited.
Kenya reacts mostly to inflation, currency stability, and capital flows. Global rate cuts alone won’t guarantee lower mortgages.
Scenarios for 2026
- Best case: Inflation is under control, government borrowing slows, CBK eases. Mortgage rates drop slightly.
- Base case: Rates stay about the same. Limited relief for borrowers.
- Worst case: Fiscal pressure or global shocks keep rates high.
Dramatic drops in mortgage rates are unlikely.
What Buyers and Developers Should Do
- Buyers: Plan for affordability today, not future hope.
- Developers: Don’t assume rates will fall when pricing projects. Build flexibility into financial models.
- Everyone: Pay attention to economic signals, bank products, and policy updates.
Conclusion
Will mortgage rates fall in 2026? It depends on multiple factors: inflation, government borrowing, CBK policy, bank decisions, and global conditions.
Access to mortgages in Kenya is limited. Even small rate changes can affect who can buy, but big drops are unlikely unless several conditions change at once.
For buyers and developers, understanding these signals is more useful than hoping for a rate cut.
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