Abstract:
The study was set to investigate determinants of defaults on insured mortgage loans at
CRDB Bank Plc using Azikiwe Branch as a case study. A cross-sectional research
design was employed in this study. The study used secondary data obtained at CRDB
Bank Plc. – Azikiwe Branch located at Dar es Salaam – Ilala Municipality. Data were
analyzed statistically. Descriptive statistical analysis employed to obtain the relationship
between variables by using mean and percentages. Inferential statistical analysis by
using Karl Pearson correlation test and linear regression analysis to obtain
the relationship between insured mortgage loan which is an exogenous variable and
endogenous variables includes the interest rate, loan period, and monthly income.
The study reveals that there is an insignificant relationship between the interest rate and
Defaults on Insured Mortgage Loan. It has been found that the average time to pay out
the loan is 13.27 years whereas, from the multivariate regression model, the loan
period influenced payment of the Insured Mortgage Loan in a negative direction.
Also, it was found that monthly income has a negative influence on the balance of the
Insured Mortgage Loan.
The study recommends that mortgage lenders should observe appropriate interest
rates, loan periods, and monthly income for an insured mortgage loan during underwriting
processes. This should be in line with building long term customer relationships which
may reveal the inner character of borrowers in the community. Lenders should invest
resources, particularly time and manpower in a thorough assessment of mortgage loan
applications covering the risk of the borrowers, employers, property sector performance
and overall performance of the economy.
