Clients' preference for a housing loan program : a conjoint analysis

Abstract

The study aimed to determine the clients' choice of a housing loan program. Through the examination of the four attributes, namely; mode of payment, collateral, delinquency, term and interest rate and its corresponding categories, the order of relative importance of each attribute to determine the clients' preference for a housing loan program was analyzed using conjoint model. To do this, plan cards were generated using Fractional-Factorial Design and were administered to 200 prospects and 200 current homeowners in Digos City as respondents. Results showed that mode of payment is the most important attribute (41.332%). Furthermore, the overall preference model for a housing loan program is a loan offering monthly payment requiring real estate mortgage as collateral, to pay the penalty when delinquent, and payable within 15 years with 10.00% interest. Moreover, utility estimations showed that the most preferred housing loan has a combination of attribute levels that offers monthly payment (mode of payment), requires co-maker with real estate (collateral), to pay the penalty (delinquency), and payable with 15 years with 8.585% interest (term and interest rate). On the other hand, the least preferred housing loan program has the following combined attributes: annual payment (mode of payment), requires chattel mortgage (collateral), foreclosure (delinquency), and payable within 30 years with 10.00% interest (term and interest rate). Implications are discussed.

Keywords: business administration, preferences, attributes, housing loan program, conjoint analysis, Philippines