A Thematic Framework for Mitigating Risks in Mortgage-Financed Projects in Kenya

Abstract

Mortgage‑financed construction projects (MFCPs) are central to Kenya’s housing delivery agenda, yet they remain vulnerable to diverse risks that compromise performance. This study investigates the nature of risks affecting MFCPs and explores practical mitigation strategies tailored to the Kenyan context. A survey research design was adopted, targeting mortgage‑financed projects initiated during the 2021/2022 financial year. Data were collected using questionnaires administered to developers. Quantitative data were analyzed using descriptive statistics, while qualitative insights were synthesized into a thematic framework for risk management. The findings revealed six dominant categories of risk: construction, financial, planning, legal/regulatory, market, and environmental. Construction risks, particularly contractor inefficiencies and material cost escalation, were most pronounced, followed by financial and planning risks. Developers emphasized that these risks are interconnected, often compounding one another to undermine project outcomes. Thematic analysis identified seven mitigation pillars: monitoring and inspection, planning and budgeting, insurance and financial risk management, due diligence and contractor selection, regulatory compliance and legal safeguards, government and macroeconomic support, and professional oversight and expertise. The study concludes that effective performance of MFCPs requires a proactive, integrated risk management approach embedded across the project lifecycle. By adopting the harmonized framework, developers, financiers, and policymakers can enhance sustained success in Kenya’s mortgage‑financed housing sector.