| dc.description.abstract | The government of Kenya has put a lot of initiatives to provide affordable housing and
increase housing ownership through mortgages by setting up the Kenya Mortgage
Refinancing Company to manage low-cost liquidity for mortgages. However, the mortgage
industry has seen a case of urban housing being unaffordable stemming from the high cost of
mortgages/high cost of properties. The current study, therefore, sought to investigate the
macro-economic factors affecting growth of mortgage financing in Kenya. That is to
determine the effect of quarterly average mortgage interest rate, quarterly Inflation rate,
quarterly GDP growth rate and Quarterly M3 (M2 plus large time deposits in banks) on
quarterly growth of mortgage financing in Kenya. This study was guided by the monetary
theory of inflation, the loanable funds theory, the classical growth theory and the quantity
theory of money. The study took a quantitative approach drawn from the positivism research
philosophy. Therefore, the study was a time series research design which was used to track
the growth of mortgage financing in Kenya for the last 20 years – from the year 2002 to
2021. The study targeted the time-series quarterly data from CBK for the last 20 years. Items
to be collected included the following: quarterly average mortgage interest rate, quarterly
Inflation rate, quarterly GDP growth rate, Quarterly M3 (M2 plus large time deposits in
banks) and quarterly growth of mortgage financing. The study used secondary data which
was extracted from CBK quarterly data reports website for the period 2002 to 2021. The
quantitative secondary data was analyzed by use of descriptive and inferential statistics. A
95% confidence interval was the statistical error variance used. Data was coded and analyzed
using STATA 14 (or EViews 14.0). The findings were displayed in the form of spreadsheets,
tables, graphs and charts. The findings indicate that lending interest rate and growth of
mortgage financing in Kenya are negatively and significantly related. Likewise, inflation rate
and growth of mortgage financing in Kenya are negatively and but insignificantly related.
However, the findings show that money supply (M3) and growth of mortgage financing in
Kenya are positively and but insignificantly related. GDP growth rate and growth of
mortgage financing in Kenya from the regression findings are positively and significantly
related. Therefore, the study concludes that lending interest rate and inflation rate are
negatively and significantly related to the growth of mortgage financing in Kenya. On the
other hand, GDP growth rate and money supply (M3) are positively and significantly related
to the growth of mortgage financing in Kenya. | en_US |
