Determinants of Demand for Mortgage Financing for Residential Properties in Nairobi County, Kenya

Abstract

This paper highlights the influence of factors such as property prices, interest rates, demographic trends and availability of credit on demand for mortgage financing for acquisition and development of residential housing (especially high income) in Nairobi. The study employed the use of descriptive survey approach. Primary data was collected from a sample of 46 respondents from a target population of 115 firms. Secondary data was obtained through review of journals, reports and government documents. The analysis was undertaken using Statistical Package for Social Scientists (SPSS). The relationships between demand for loans and four factors have been examined and established.  The results of the study established that demand for mortgage for purchase of residential properties in upmarket Nairobi is positively correlated to property prices, interest rates, demographic trends and availability of credit and influence on demand for mortgage. In the end, it is recommended that the government through the central bank continuously provides updates on prevailing interest rates and other macro-economic changes to enable informed decisions by consumers. 

Keywords: mortgages, interest rates, property prices, financial institutions, credit availability