The Bank of Uganda (BoU) is set to regulate mortgage refinancing institutions following the introduction of the Mortgage Refinance Institutions Bill, 2025. Once enacted, this legislation will provide a framework for licensing and supervising these entities to ensure they operate within established guidelines.
The Bill, which was presented for its First Reading in Parliament on March 12, 2025, by Minister of State for Tourism, Wildlife, and Antiquities, Hon. Martin Mugarra, seeks to address gaps in the regulation of mortgage refinancing institutions in Uganda.
Currently, Uganda lacks a legal structure to govern the establishment and operations of mortgage refinance institutions. According to Hon. Mugarra, these institutions are essential in enhancing liquidity for financial and microfinance institutions, enabling them to offer long-term mortgage products. Without such institutions, primary mortgage lenders rely heavily on customer deposits and short-term borrowing, leading to challenges such as maturity mismatches.
“The Bill mandates mortgage refinance institutions to provide long-term funding for primary mortgage lenders, ensuring that mortgages are refinanced or pre-financed for a period of at least five years,” the proposed law states.
With access to long-term funding, lenders will be able to extend mortgage repayment periods, reduce interest rates, and introduce more manageable installment plans. Additionally, borrowers may benefit from a grace period before beginning repayments.
Under the Bill, individuals and institutions must obtain a license from BoU before engaging in mortgage refinance business. Special provisions also allow for Islamic mortgage refinancing, which will require Central Bank approval.
Failure to obtain the required license will attract strict penalties. An individual found operating without authorization may face a fine of UGX 10 million, imprisonment for up to seven years, or both. For corporate entities, the penalty is significantly higher, reaching UGX 140 million.
Moreover, licensed institutions must commence operations within a year of receiving their license. If they fail to do so, the Central Bank has the authority to revoke the license.
The Bill also restricts mortgage refinance institutions from directly lending to individuals or businesses outside the primary mortgage lending sector. This measure is designed to ensure that the refinancing institutions strictly support the mortgage market rather than engaging in general credit provision.
The Bill has been referred to the Committee on Finance, Planning, and Economic Development for further scrutiny. The Committee is expected to review the proposed legislation and present its findings to Parliament within 45 days.
If passed into law, the Mortgage Refinance Institutions Bill, 2025 is expected to boost access to affordable housing finance in Uganda by strengthening the mortgage lending sector and ensuring long-term stability for home buyers.
