Savings and Credit Cooperative Societies (Saccos) continue to offer a viable, more affordable, alternative to commercial banks for land and housing financing in the country.
Data from Sacco Societies Regulatory Authority (Sasra) Regulated Saccos shows they cumulatively disbursed over Ksh125 billion in credit for land and housing during 2025, with most of the loans being disbursed as mortgages.
This amount represents a significant portion of the total gross loans, which reached over Ksh948 billion by December 2025.
Top Saccos in Kenya like Stima and Mwalimu National have been at the forefront of providing competitive, long-term home loans, often requiring lower deposits and offering more flexible, member-oriented terms, according to Sasra.
On the other hand, commercial banks disbursed mortgage credit for purchase of housing and land in the tune of Ksh103.1 billion in 2025, much lesser than Saccos, according to industry data.
In a worrying trend, the loans commercial banks disbursed represented a decrease from previous, higher levels. The mean home loan size fell to Ksh9 million, down from Ksh9.4 million in 2023.
The data shows Kenyans continue to be more comfortable with Saccos mainly due to the low interest rates that Saccos continue to offer – 9 per cent to 12 per cent annually.
Mortgage interest rates in 2025 for banks ranged from 12 per cent to 16 per cent per annum, with Kenya Mortgage Refinance Company (KMRC)-backed loans offering lower rates of 9 per cent to 10 per cent.
According to Martin Gichangi, an economist and a financial analyst in Nairobi, unless commercial banks water down their collateral demands and make their lending more inclusive for Kenyans, Saccos will continue to be the premier lending platform for Kenyans.
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“There have been a lot of interventions from the Central Bank of Kenya (CBK) over the years but commercial banks continue to lag behind in their lending to Kenyans. Take for example the Credit Guarantee Scheme that was mooted by CBK, that was meant to de-risk lending to SMEs by commercial banks.
The lending is still slow since banks still are hesitant to lend even with the government offering to guarantee such loans. The only alternative are Saccos,” says Gichangi.
The Kenya Credit Guarantee Scheme (CGS) launched in 2020 by the National Treasury, was meant to enable MSMEs access affordable credit by sharing risks with seven participating commercial banks namely; Absa, Co-operative, Credit Bank, DTB, KCB, NCBA and Stanbic.
It targeted registered businesses with between one and 50 employees and up to Ksh100 million turnover, covering working capital and asset acquisition.
Over a period of five years, the banks have only lent a measly Ksh150 billion through the scheme with borrowers complaining of stringent demands made by the lenders.
Gichangi explains that Saccos offer more affordable, stable interest rates that do not fluctuate with the market often resulting in an effective rate when accounting for dividends paid back to members.
“They are more accommodating to individuals with informal incomes or those in the gig economy. Loans can be secured using savings as collateral or through guarantors, avoiding the high costs and strict requirements of bank loans,” he explains.
Saccos offer higher interest rates on savings, sometimes reaching 16 per cent in dividends, compared to the low rates offered by traditional banks.
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As member-owned entities, Saccos focus on community development and often provide better, more personalised customer service, with profits redistributed to members in the form of rebates.
For housing, Saccos provide longer repayment periods, making them a suitable, affordable path to homeownership.
However, Saccos have also been urged to train their staff more when it comes to marketing their mortgage products.
A new report authored by the Saccos regulator has revealed existing knowledge gaps among society’s staff on how mortgage products work and further recommended training to all relevant Sacco workers.
By Mwiti Mukunga
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