| dc.description.abstract | All over the world, how mortgages are financed in a cost efficient way has increasingly
concerned banking regulators and policymakers as mortgage costs have played a very
important role in improving a national economy, quality of living and in particular
housing affordability. Home mortgage product purchasing is closely related to the
banking system and its main activity, lending. In addition, the housing market has
specific institutional features whereas state intervention is crucial, interrelated with social
and economic policy, which radically affects people’s decision. In Kenya, the demand
for housing is immense and driven by a growing population and urbanization. However,
statistics from WB, indicates that there is low purchasing rate of mortgage products
despite Kenyan mortgage market has the potential to grow to Sh800 billion, which is
about nine times the current size. The objective of this study was to investigate influence
of bank policy on purchase rate of home mortgage product in banking industry where the
variables are interest rate, lending criteria, price of mortgage product and central bank
policy. According to BBK, there are 7 branches in CBD. This study employed stratified
sampling technique in coming up with a sample size of 86 from a total population of 104.
The study relied mostly on primary data sources where self-administered questionnaire
was utilized as source of data. Data was collected purely quantitative. Quantitative data
was coded and entered into Statistical Packages for Social Scientists (SPSS Version 17.0)
and analyzed using descriptive statistics. The finding was presented inform of frequency
tables, pie charts and bar charts and explanation will be presented in prose. The study
found that there has a gradual increase in interest rate on home mortgage product as
shown by 64% of the respondents. Variable interest rate contributes to slow growth in
residential mortgage market as shown by mean score of 4.01. Banks have a set lending
procedure followed when issues mortgage loan to a client as depicted by 69% of
interviewed respondents. Banks finance selective mortgage products as shown by 96% of
the respondents. central bank advice financial institution on mortgage loan application as
indicated by 84% of the respondents. CBK provide some guideline on mortgage products
as illustrated by 94% of the respondents. Price of mortgage influence purchase rate of
home mortgage as revealed by 96% of the respondents. The study concludes that there is
positive relation between interest rate and purchase rate of home mortgage product. It
was clear from the study that banks impose interest rate on mortgage product and there is
gradual increase in interest rate. Banks lend mortgage loan for the purchase of land for
development and existing buildings; they finance construction projects. Looking forward
toward the realization of the economic pillar of Kenya’s Vision 2030 demands that the
financial institution should focus on making high profits in order to eliminate social
problems facing Kenyan citizens today, through control emerging and endemic financial
problems. The study recommended that banks should consider their lending criteria. The
lending institution need to consider the personal circumstances and earning capacity of
the prospective borrowers in order to calculate the maximum amount to be lent over an
agreed period. The lending institution need to consider the personal circumstances and
earning capacity of the prospective borrowers in order to calculate the maximum amount
to be lent over an agreed period. | en_US |
