The Bank of Uganda will regulate mortgage refinancing institutions through the Mortgage Refinance Institutions Bill, 2025, which requires licensing for operations, particularly for Islamic mortgage refinance. The Bill addresses existing challenges in mortgage financing, mandating long-term funding solutions and penalizing non-compliance, to enhance affordability and access to housing.
The Bank of Uganda is poised to regulate mortgage refinancing institutions following the introduction of the Mortgage Refinance Institutions Bill, 2025. This proposed legislation will require such institutions to obtain a license or approval, particularly for Islamic mortgage refinance operations, ensuring compliance with Central Bank regulations.
The Bill, presented by Hon. Martin Mugarra during a plenary session on March 12, 2025, indicates the lack of existing legal frameworks governing mortgage refinance institutions in Uganda, which are crucial for enhancing liquidity among financial entities. Mugarra emphasized the vital role these institutions play in enabling the provision of long-term mortgages.
Currently, primary mortgage lenders face challenges due to dependency on short-term financing, leading to maturity mismatches while seeking to provide long-term credit. The Bill mandates that mortgage refinance institutions must offer long-term funding solutions, specifically emphasizing refinancing or pre-financing options spanning a minimum of five years.
To enhance affordability in housing, the proposed law aims to facilitate primary mortgage lenders in extending loans at lower interest rates and offering manageable repayment terms. The enactment of this Bill is expected to significantly unlock financing options, thereby promoting access to affordable housing in Uganda.
The Bill also stipulates stringent conditions for licensed entities, specifying that licenses will be revoked should institutions fail to commence operations within one year of registration. Penalties are outlined for violations, including substantial fines and potential imprisonment for operating without a license. Furthermore, the Bill restricts refinancing to primary mortgage lenders in good standing only.
The Committee on Finance, Planning and Economic Development will review the Bill and is expected to present its conclusions within a 45-day timeframe.
The Mortgage Refinance Institutions Bill, 2025 represents a significant step towards regulating mortgage refinancing practices in Uganda, potentially facilitating affordable housing solutions. By instituting licensing requirements and emphasizing long-term funding solutions, this legislation aims to improve the mortgage landscape, ensuring that primary lenders can operate effectively and sustainably. The implications of this Bill could lead to increased access to financing and ultimately contribute to better housing conditions for the population.
Original Source: www.zawya.com
