Abstract:
1. Introduction
Sri Lanka faces a severe housing crisis driven by economic instability,
rising property prices, and limited access to affordable financial support.
This study examines the effectiveness of housing and personal loans in
facilitating homeownership for middle-income first-time buyers in Sri
Lanka, focusing on key factors such as affordability, accessibility,
processing efficiency, and alignment with borrowers' homeownership
aspirations.
2. Research Methodology
The study employs a qualitative research design, utilizing purposive
sampling to target middle-income borrowers and bank representatives
with direct experience in loan processes. Semi-structured interviews with a
sample of 15 participants, including ten borrowers and five bank officials,
provide rich data on loan accessibility, user satisfaction, and encountered
challenges. Thematic analysis is applied to identify key patterns and
insights.
3. Findings and Discussion
Preliminary results reveal that while housing loans are commonly used for
financing home purchases, personal loans serve as supplementary funding
for expenses like renovations or furnishing. Borrowers expressed concerns
over high interest rates, lengthy approval processes, and rigid repayment
terms, diminishing their overall satisfaction. However, the flexibility and
scope of these loans partially meet expectations, indicating a need for
tailored improvements to serve middle-income borrowers better.
4. Conclusion and Implications
The study concludes that housing and personal loans play a significant role
in facilitating homeownership for middle-income earners, though there is
scope for enhancing their effectiveness. Recommendations include revising
interest rate structures, simplifying loan application processes, and
introducing innovative financing models. Future research could benefit
from larger samples and quantitative analysis to provide a broader
perspective on loan utilization patterns.
