Variability of Mortgage Interest Rates and Real Estate Growth in Kisumu Town Kenya

Abstract

The purpose of the study was to investigate the variability of mortgage interest rates and real estate growth. The main problem of the study was the accessibility to mortgage financing as it has been a major problem over the past and many real estate developers have shied from taking up mortgages due to factors like high mortgage interest rates. The main objective of the study was to establish the effect of variations of mortgage interest rates on real estate growth in Kisumu town. The study is of great significance as it could be used to provide background information to research organization and scholars who would want to carry out further studies. The study could also aid Kenyan government in understanding real estate as a fundamental investment project. The study was done through the use of a triangulated research design. The target population of this study comprised of all the 28 licensed commercial banks operating within Kisumu town with major focus on the major 5 dealing with mortgage financing. The most appropriate method for this study was stratified random sampling since the method entails grouping the population into categories based on their varying characteristics. This study adopted secondary sources. This was from the 28 registered financial institutions within the Kisumu town. Secondary data was collected using the secondary data capture form. Data analysis involved descriptive and inferential statistics and Statistical Package for Social Sciences software were used in the analysis. The study concluded that there is need for the researchers to consider many factors in regards variability of mortgage interest rates as there exists minimal variability between the interest rates and mortgage disbursement. The research further concluded that there existed little information in regard to non -performing loans and also for the fourth year leading to inadequate data hence, less credible analysis and therefore future analysis for at least more years to give consistent and conclusive conclusion. The study suggested exploitation of other variables like the economic factors so that mortgage uptake challenge could be fully exhausted so that mortgage uptake troubles could be a problem of the past and also the government should give subsidies and also limit high interest rates to the people who are willing to take up mortgages and this could help in real estate growth