Determinants of Acquisition of Mortgage Financing in Housing Projects among the Middle Income Home Owners in Nandi South District
Gesimba, Kerubo Carolyne
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Owning a standard house is one ambition that most Kenyans share. Every Kenyan, formally or informally employed will strive to have a place to call home. The Kenyan Government established a National Housing Cooperation to perform duties and have the powers conferred on it by the 'The Housing Act' (The Housing Act, Chapter 117, section 3). The roles of the cooperation include the development of decent and affordable housing and facilitation rural housing development. The vision of NHC is "A decently housed Nation". The Central Bank of Kenya has also authorized some banks and mortgage companies to engage in mortgage business. It is the Government's long term objective to move towards a situation where every individual or family lives in a decent affordable house, whether publicly or privately developed. Despite all these efforts Kenya has a large housing gap which is growing every year. The housing gap can only be partially financed by mortgages, while other solutions are required for lower income groups such as Housing Microfinance and rental housing. Only 2.4 percent of the total population in Kenya can afford a mortgage for a basic house (World Bank Report, 2011). It is therefore necessary to consider mortgage financing seriously so as to encourage decent housing, especially in the rural areas. Improvement in housing stock is a strategically important social and economic investment. The general objective of this study is to establish the determinants of acquisition of mortgage financing in housing projects among the middle class home owners. The specific objectives of the study are; to determine the extent to which the type of employment influences the use of mortgage as an option for financing, the effect of the prevailing interest rates on the use of mortgage as an option for financing and the effect of the re payment period on the use of mortgage as an option for financing housing projects in Nandi South District. The study was conducted in Nandi South, Kenya. The target population was the current home owners. The study adopted a descriptive approach. Data presentation was done in tables after using questionnaires to collect the data. The analysis was done with the aid of SPSS. From the data collected and analyzed, it was observed that mortgage financing has not explored the rural market. From the study it was found that there is a potential mortgage market especially in the informal sector where farmers, businessmen and athletes are able to acquire mortgages. The mortgage market should however reduce their interest rate, increase the repayment period to reduce the monthly repayments and provide low-cost housing in order to compete with other methods of financing like SACCOs.