The Bank of Uganda will regulate mortgage refinancing institutions through the Mortgage Refinance Institutions Bill, 2025, which mandates licensing and sets guidelines for operation. This will improve financial liquidity, enhance mortgage affordability, and fine-tune existing practices within the mortgage sector in Uganda.
The Bank of Uganda (BOU) is poised to regulate mortgage refinancing institutions with the anticipated passage of the Mortgage Refinance Institutions Bill, 2025. This legislation mandates that individuals must obtain a license from the Central Bank to engage in mortgage refinance business, specifically addressing Islamic mortgage refinances. The Bill aims to establish a systematic approach to mortgage refinancing in Uganda, where previously no such regulations existed.
During the plenary sitting on March 12, 2025, the Minister of State for Tourism, Wildlife and Antiquities, the Honorable Martin Mugarra, highlighted the significance of mortgage refinance institutions in facilitating liquidity for financial entities and microfinance deposit-taking institutions. The absence of these entities has forced primary mortgage lenders to depend on customer deposits and short-term borrowing, leading to a maturity mismatch that the Bill seeks to rectify by providing long-term funding solutions.
The Bill specifies that mortgage refinancing institutions must offer financing for a minimum term of five years, which would allow primary mortgage lenders to provide affordable mortgages with better payment terms. Additionally, the proposed law will enable lenders to offer longer payment durations and grace periods before loan repayments begin. This structure is intended to enhance access to financing and ultimately contribute to improving housing affordability in Uganda.
Furthermore, the Bill imposes strict penalties on licensed mortgage refinancing institutions that fail to initiate their business operations within one year, stating that such licenses will be revoked. Operating without a license carries severe consequences, including fines and possible imprisonment. The legislation clearly outlines that mortgage refinance institutions can only provide financing to approved primary mortgage lenders in good standing.
Lastly, the Committee on Finance, Planning and Economic Development will review the Bill and report its findings to the House within 45 days, marking a significant step towards structured mortgage financing in the country.
The Mortgage Refinance Institutions Bill, 2025, is set to provide regulatory oversight to mortgage refinancing institutions in Uganda, enhancing the overall efficiency of mortgage lending. By mandating licensing and establishing guidelines for operation, the Bill aims to rectify existing financial mismatches and improve housing affordability. The regulation will ultimately foster a more robust mortgage lending landscape in Uganda, encouraging liquidity and sustainable financing practices.
Original Source: www.zawya.com
