Influence of housing loan repayment on household welfare: a case of habitat for humanity project in Kisii region, Kenya

Abstract

The purpose of this study was to examine the influence of housing loan repayment on household welfare through habitat for humanity projects in Kisii region, Kenya. This study was guided by the following objectives: To establish the influence of housing loan repayment on affordability of health care services, to determine the influence of housing loan repayment on household income of the benefactors, to examine the influence of housing loan repayment on affordability of school fees for the school aged children and to determine the influence of housing loan repayment on security/collateral of the benefactors. Previous studies carried out on the influence of housing loan repayment on household welfare indicated that housing loans were routinely used to pay school fees and cater for food and health care services, Descriptive survey research design was used in this study. A sample of 50 Habitat for Humanity housing projects homeowners was selected using both stratified and simple random sampling technique. Semi-structured questionnaires were used to facilitate the acquisition of relevant information on variables under consideration. The data collected was analyzed using statistical package for social sciences (SPSS). The data output is presented in form of tables and description. The research findings show that housing loan repayment influences affordability of school fees and health care services especially when schools open and when one or more member of a family of the borrower is sick. On the other hand, since housing loan has to be paid on a monthly basis, the borrowers found themselves borrowing from different financial institutions in order to settle other loans which led to piling up of the loans thereby causing stress and frustration since the borrowers were forced to hide during loan payment period. Diversified income is an important factor that was noted to have positive influence on housing loan repayment. The research findings show that members with more than three school aged children had difficulty in housing loan repayment and that housing loans were being paid on a monthly basis thereby giving the beneficiaries enough time to prepare for the repayment of the loans on time. Saving was also noted to be a source of income for the respondents thereby acting as collateral towards loan repayment. Low income as a result of housing loan repayment was also noted as a challenge by most of the respondents. This led to more problems as their resources are pulled down by loan repayment thereby making them to fore-go important basic needs for their families. Majority of the respondents indicated farming and business as their main source of income. Based on the findings, the study recommended that financial literacy and health education should be offered to the beneficiaries since this will help them manage the little resources they have thereby enhancing housing loan repayment. The study also recommended that repayment period should be re-scheduled in order to give the beneficiaries more time to repay their housing loans. Finally, the study recommended that individual loaning systems should be adopted since group lending mechanisms are strenuous to the borrowers who have to pay for the others in case they fail to pay. The study concludes that housing loan repayment influences household welfare. This was showed by the opinions of the respondents who strongly agreed with the fact that housing loan repayment influences household welfare which constituted 72% of the respondents.