Abstract:
The rapid development of a housing finance has led to a radical transformation in mortgage sector in Kenya in recent years. The changing home mortgage market and unique financing requirements brought about by widespread homeownership have caused a continuing evolution in mortgage lending practice. There is a large gap between demand and supply of housing finance to the low and middle income groups in Kenya. Accessibility of affordable financing options is limited hence making it difficult to own their dream homes. The aim of this study was therefore to evaluate various funding strategies with a view develop an appropriate funding strategy for low and middle housing markets in Kenya.
The research adopted a survey design and was achieved through a questionnaire survey and interviews. Data was collected from documented information from central bank on funding institutions in Kenya. The target population in this study was organizations registered for mortgage lending country wide as of 31st December 2012, commercial banks, MFIs and Sacco‟s. There were 46 registered mortgage providers licensed under the Banking Act of Kenya and five active MFIs offering housing finance to middle and low income groups. Therefore, the total population for the study consisted of 51financinginstitutions. Random sampling was used to pick the respondents and data analysis was carried out using descriptive, Content and thematic analysis
This study established that the current housing financing options are not appropriate to low and middle income earners owing to high interest rates and collateral requirements. This study therefore, recommends a model which can be applied in the market as an-appropriate funding strategy. Self-help housing model-for individuals constructing their own house is a process-based strategy of acquiring shelter over a period of time by individual households whose social-economic conditions determine the length of time of the process and the nature of building.
