Effect of Interest Rate Spread on the Performance of Mortgage Financing in Commercial Banks in Kenya

Abstract

The objective of the study was to determine the effect of interest rate spread on the Performance of mortgage financing in commercial banks in Kenya. The study was a descriptive study which utilized secondary data on mortgage performance from the 41 Commercial banks in Kenya, with the period of study being between the years 2011 to 2014. The data was analyzed by using descriptive statistics as well as inferential statistics. Descriptive statistics was useful for coming up with an understanding of the data and thus helped in organizing and summarizing of the data while inferential statistics was to help in making of valid conclusions from the data. Correlation and regression analysis were used in order to find the degree and nature of the relationship and thus help in fulfilling the purpose of the study. The findings of the study indicate that interest rate spread is significant in influencing mortgage performance of banks as indicated by a coefficient of determination of 0.999. There is a positive significant relationship between the interest rates spread and the performance of mortgages.