Once passed into law, this bill will empower the BOU to regulate mortgage refinancing institutions, including those offering Islamic mortgage refinancing services, in an effort to improve affordable housing access and stabilize the mortgage market in Uganda.
The Role of Mortgage Refinance Institutions
Currently, Uganda’s primary mortgage lenders face challenges related to short-term funding sources for long-term mortgage loans. This mismatch, known as maturity mismatch, has hindered banks’ ability to offer affordable mortgages with longer repayment terms.
The Mortgage Refinance Institutions Bill, 2025 aims to address this gap by allowing the establishment of mortgage refinancing institutions that can provide long-term funding to primary mortgage lenders. These institutions will refinance existing mortgage portfolios and provide funds for new mortgages, enabling lenders to offer longer-term loans, more affordable interest rates, manageable repayment installments, and the option of a grace period before the loan repayments begin.
For Uganda’s banking sector, the bill opens the door to a more sustainable and affordable mortgage finance system, ensuring that more Ugandans have access to homeownership opportunities.
Importance of Public-Private Partnerships
The new regulatory framework also creates a significant opportunity for Banks to strengthen their relationships with both government bodies and private sector players. Through public-private partnerships (PPPs), Banks can work alongside mortgage refinancing institutions, real estate developers, and regulators to increase access to affordable housing and offer long-term financing solutions that are sustainable for all parties involved.
By aligning with government priorities to address Uganda’s housing deficit, Banks can reinforce their role as trusted financial partners in economic development and housing solutions.
Regulatory Framework and Its Impact
The Mortgage Refinance Institutions Bill, 2025 also includes tough penalties for institutions that fail to meet operational requirements. Mortgage refinancing institutions will be required to commence business within 12 months of receiving their license. Failure to do so will result in the revocation of their license by the Bank of Uganda. Additionally, the bill imposes fines on individuals and entities that operate without a license.
The bill ensures that only licensed and regulated institutions operate within the space, creating a more stable and trustworthy environment for financial institutions and consumers alike.
Looking Ahead: Opportunities for Banks
As Banks in Uganda continue to expand their mortgage offerings, the Mortgage Refinance Institutions Bill, 2025 presents several key opportunities:
Leadership in Mortgage Solutions
Banks will take a leading role in the mortgage refinancing space by forming strategic partnerships with newly licensed institutions and expanding their long-term mortgage offerings.
Access to Affordable Housing
With the potential for more affordable rates and longer loan terms, Banks can help more Ugandans enter the housing market and address the growing housing demand in the country.
Regulatory Compliance
By staying ahead of the regulatory curve, Banks can ensure that their mortgage offerings are fully compliant with Bank of Uganda’s regulations, reinforcing their positions in the financial services sector market.
The Mortgage Refinance Institutions Bill, 2025 marks a turning point in Uganda’s housing finance sector. For Banks in Uganda, this is an opportunity to not only expand their mortgage portfolio but also play a key role in the socio-economic transformation of Uganda by making homeownership more affordable and accessible.
