FACTORS INFLUENCING PERFORMANCE OF MORTGAGE LENDING BY COMMERCIAL BANKS IN MOMBASA COUNTY

The mortgage market in Kenya has been rising over time which has seen growth in profitability of the commercial banks that have been offering mortgage lending to Kenyans. Advancing mortgage credit implies that the commercial bank money is tied up somewhere whose payment is in the future. This study sought to determine the factors influencing performance of mortgage lending by commercial banks in Mombasa County. The study sought the following specific objectives: How mortgage costs influence mortgage lending by commercial banks in Mombasa County and how loan structure influence mortgage lending by commercial banks in Mombasa County. A descriptive research design was used. The population of this study included all the 43 Commercial Banks in Mombasa County. The target population consisted of mainly branch managers, relationship managers, Credit managers and operations managers. The sample size of this study involved all commercial banks that offer mortgage financing between years 2010 to 2015. The secondary data was sourced from the annual reports available from the Central bank of Kenya. Data analysis was done using a regression model to test the influence of various variables on the performance of mortgage lending by commercial banks in Mombasa County. Primary data was obtained from self-administered questionnaires that were administered to all commercial banks within Mombasa County. Data analysis was done using SPSS (Version 22) and summarized using descriptive statistics. The study revealed that majority of the respondents strongly agreed that mortgage lending has improved profitability margins of most commercial banks in Mombasa County. 90% of the respondents strongly agreed that lack of credit history influences the capability to get mortgage loans. Finally, the results revealed that mortgage costs and loan structure had a significant correlation on the performance of mortgage lending by commercial banks in Mombasa County. The study recommends that the management of commercial banks should take into consideration on mortgage costs and particularly on how to lower the interest rates. Key Terms: Mortgage, Mortgage uptake, Interest rate, Monetary policy, Inflation, Securitization