Factors influencing demand for financing of mortgage projects in Mombasa county, Kenya

Abstract

The study sought to establish factors affecting the demand for Mortgage financing in Mombasa County Kenya. The objectives of the study are: to establish how mortgage interest rates influences demand for financing Mortgage Projects in Mombasa County, to establish how availability of credit influences demand for financing Mortgage Projects in Mombasa County, to examine how demographic trends influences demand for mortgage financing in Mombasa County and to establish the extent to which property prices influences demand for mortgage financing in Mombasa County. Target population of in the study comprised of all the registered mortgage finance institutions, real estate firms and a mortgage brokerage company. The Researcher selected a sample of 50 respondents from a target of population of 105 firms. Data was analyzed qualitatively through content analysis. Quantitative data was first coded then analyzed using SPSS (Statistical Package for Social sciences). A Kothari’ formula was used to come up with a sample size of 50 respondents. The Researcher purposefully interviewed 14` key informants from real estate/motgage firm and 23 respondents from banking sector managed to fill out the questionnaire. Stratified sampling was used to select 50 respondents using Kothari (2003) formula. Primary data was obtained from the copies of self-administered questionnaires and the secondary data was obtained from reviews of Mortgage investment surveys, CBK reports and Vision 2030 document Data was analyzed qualitatively through content analysis. Quantitative data was first coded then analyzed using SPSS (Statistical Package for Social Sciences) Version 20.0. After interpretation, the findings were presented in tables using frequencies and percentages. Both primary and secondary data were be used. Both null and alternative hypothesis were tested using the Chi-square formula and it was found that the alternative hypothesis in each objective significant relationship with financing of mortgage projects in Mombasa County. The study found out that mortgage interest rates, credit availability, demographic trends and property prices have influence on demand for financing of mortgage projects in Mombasa County. To the Government and policy makers, the study gives insight on long term financial planning. To the academicians the study contributes to the existing body of knowledge of financial literacy in Kenya. The study suggested the following areas for further research: Establishment of an acceptable property Index in Kenya which is key to development of the mortgage finance market, the role of pension schemes in encouraging the development of mortgage projects and Factors influencing Policy implementation towards mortgage interest rates.