| dc.description.abstract | In Kenya demand for housing units in urban areas averages 150,000 and rural areas 300,000 with annual production of between 20,000 to 30,000 thus creating a shortfall. The main sources of mortgage financing are through commercial banks hence the country suffers from a lack of new foreign participation in its property market. A number of real estate markets have reacted to the challenge through the introduction of securitization, a form of indirect investment in property through the conversion of property assets into trade able paper securities. This study analyzes the feasibility of introducing mortgage backed securities in Kenya capital market.
The study was carried out as an exploratory study and used primary data collection method through use of semi structured questionnaire with both open ended and closed ended questions to obtain first hard information from the commercial banks and mortgage financing companies listed at Nairobi Stock Exchange.
The findings of the study revealed 40% of the financial institutions hold mortgage loans of over Kes I billion showing the capability of originating mortgage loans for securitization and 70 % of financial institutions raised additional funds to finance their expansion plans indicating the need for additional funds . It also noted regulatory framework on the asset securitization is adequate however lack of enough credit rating agencies and special purpose vehicles may hinder the implementation of the securitization of mortgage loans.
The study concludes that implementation of mortgage backed securities is necessary in order to improve on capital deepening in the capital market and attract foreign investments in the property market. | en_US |
