Analysis of the impact of mortgage financing on the affordability of housing in Kampala
Abstract
The study analyzed the impact of mortgage financing on the affordability of housing in
Kampala. The objectives of this study were to examine the extent to which the mortgage
finance market affects housing affordability in Kampala; to analyze the underlying factors
leading to high interest on mortgage finance; to assess the strategies the government has put
forward to address the issue of mortgage finance and housing affordability. The study adopted
both quantitative and qualitative approach, data was collected through questionnaire survey
from occupants of randomly selected estates within as well as interviews with some financial
institutions. A total of 120 close-ended questionnaires were distributed to the occupants but
only 101 were completely answered. The results show that 63.4% of the occupants aged
between 18-30 years are nowadays much involved in mortgage finances followed by those
aged between 31-50 years at 29.7% and 6.9% were above 50 years. Education level was
generally disagreed by both male and female occupants at 60.0% and 72.22% respectively as
a determinant of housing affordability, household income as a determinant was also disagreed
as a determinant, employment status was agreed by males as a determinant and disagreed in
general by females. Land cost as a determinant of housing affordability was agreed on by
61.9% and 63.64% of females disagreed. Demand and supply as a determinant of housing
affordability was agreed on by majority of females at 56% and disagreed on by males at 100%.
Dependents’ quantity was disagreed on by females as a determinant at 60% and agreed on by
majority of males at 59.36%. Inflation and exchange rate instability, Government policy, debt
to income ratio and loan to value ratio were identified by the respondents from financial
institutions as the factors influencing the price of mortgage. Fore closure risk was pointed out
as the major problem involved in mortgage finance. The chi-square test revealed that most of
the factors of mortgage price and housing affordability were given by both males and females
independent of gender. This implies that the responses provided did not depend on gender at
all. The study recommended that the government should come create enabling environment for
public-private partnership promoters to provide affordable housing units to the populace which
will justify affordable housing as a veritable public housing scheme and help reduce the
massive housing deficit being experienced in the country.