Interest Rates On Magnitude Of Agricultural And Mortgage Loans In Uganda

The study carried on the relationship between interest rates on loans sizes disbursed specifically agricultural loans and mortgage loans obtained the data from bank of Uganda website. Interest rates was measured as percentage wei õhted lending rates, mofigage loans as percentage mortgage loans of billions of shillings, agricultural loans as percentage agricultural loans of billions of shillings during the 1994-2012 period. The objectives were to establish the trend of interest rates, agricultural loans and mortgage loans over time. It intended to work out the relationship between interest rates on agricultural and mortgage loans.

By the aid of time series graphs i.e. correlogram, the interest rates was irregular/not stationary over time, agricultural loans exhibited an inverse hyperbolic pattern whereas mortgage loans showed an exponential pattern. A scatter plot gave a graphical relationship between agricultural loans and interest rates vvhich revealed a verv small relationship with points widely scattered and also the relationship between mortgage loans and interest rates was shown to be weak though positive.

Correlation analysis was conducted for the relationship between agricultural loans and interest re¿es where (he correlation coefficient was negative. mortgage loans and interest rates showed a positive coefficient though weak. Iri addition re oression analysis was conducted where agricultural loans and mortgage loans were regressed on interest rates and the results showed ne strong relationships for the respective loans. The hypothesis of the study was that no significant relationship existed between loans and interest rates and this was accepted as the null hypothesis at 0.05 level of significance using 1-test and one tailed test concluded that. there is no significant relationship between the respective loans and interest rates.

Therefore, recommendations were made that. orcE to Improve loans accessibilitv Ìo the (J oandan nopulation, the various stakeholders should emphasize other factors such as sensitization or awareness, proper appraisal of collateral, investments and savings etc while regulating interest rates on mortgage loans.