A Survey Of The Effect Of Mortgage Institutions In The Provision Of Affordable And Sustainable Housing In Nigeria
Housing in most countries of the world is an important economic sector and the manner in which resource are mobilized for has a major effect on the economy. Despite the knowledge of the importance of housing, ownership or accessibility to decent houses and mobilization of resources remain a problem in Nigeria. This project examines the effect of mortgage institution in the provision of affordable and sustainable houses in Nigeria. The survey covers mortgage institutions, federal and state ministries and parastatals, stakeholders in the building industries and educational sector. To be able to evaluate the effect, questionnaires were administered with personal interview. A total of fifty (50) questionnaires were distributed randomly to those staffs. The percentage method and chi-square test were used in analyzed the data gathered. The results revealed that the effect f mortgage institutions in Nigeria is inadequate. This ineffectiveness can be traced to high rate of interest charged on properties, insufficient fund, low level of participation in the Natural Housing Fund and down payment. It is recommended that the rate charged on properties should be reduced, worker should be encouraged to register in the National Housing fund and he Government in collaboration with lending houses should develop a formular to remove various bottle neck connected with loans, especially the issue of collaterals.
1.1 Background of the Study
Housing provides more than shelter for man because it encompasses all social services and utilities that are needed for a livable environment in order for any community to be worth living in housing accepted in man’s hierarchy of need to be next to food.
Odetundun (1995) affirmed that housing in most countries of he world was an important economic sector and the manner in which resources were mobilized for housing had a major effect on the economy. Fundamental to the provision of adequate housing in qualitative terms is the availability of housing finance. According to Olutuah (2001) housing quality in Nigeria is indeed poor; this can be glanced form he high rate of urbanization in the country which he described as social economically handicapped urbanization. The high rate of urbanization resulting form rural urban migration and high rate of population increase is without corresponding commensuration in the rate of economic development, social change and technological advancement. Urban poverty is thus concomitant of such development which finds ready expression in a high incidence of housing poverty.
As Muoghalu (1987) observed, housing poverty is determined by the mobility to afford standard housing thus, the provision of adequate housing is hinged on the accessibility of housing finance. In Nigeria, the problems of housing are enormous and complex but the private sector had contributed immensely to its provision in the country. Onibokun (1990) opined that the private sector provides a preponderate proportion of residential building in the country. The rapid rate of urbanization, high rate of inflation and instable economy have given to increase in cost of housing which is often beyond the capacity of the medium / low income groups.
As parts of the efforts in addressing housing problems in Nigeria, government has institute mortgage institutions to provide low cost housing loans that are accessible even to low income earners.
1.2 Statement of the Problem
The basic problem of mortgage institutions could be viewed from the following
- Increase in capital requirement
- High interest rate
- Management adequacies.
1.3 Aim and Objectives of the Study
The aim of the study is to access the effect of mortgage institutions in the provision of affordable and sustainable houses in Nigeria.
The objectives of this study are:
- To identify the various functional / operational mortgage institution in Nigeria.
- To identify and evaluate the effect of mortgage institutions in the provision of affordable and sustainable housing in Nigeria.
- To identify the hindrances facing mortgage institutions in Nigeria
1.4 Research Questions
- Does mortgage institutions helps in provision of affordable and sustainable houses in Nigeria?
- Does mortgage institutions contribute in financing construction industry?
- Does mortgage institutions helps in carrying out housing estate in Nigeria. ?
1.5 Significance of the Study
This study was carried out with participant in the housing sector especially developers in mind that they will find this work useful to reduce difficulties involves in obtaining finance for housing development. Researchers would also find this work relevant as a reference literature in carrying out their research work.
Finally, that Nigerians will also be of immersed benefit in the sense that they will be able to know how finance can be sourced for housing development.
1.6 Scope of the Study
This study covers the major effect of mortgage institutions in the provision of affordable and sustainable houses in Nigeria. And also it plays the role to provide low cost housing loans that are accessible even to the low income earners.
However, during the progress of this work, some other relevant mortgage institutions were mentioned.
1.7 Limitation of the Study
During this study, a great limitation were experienced in obtaining suitable materials on this study, because of the reluctance of owners of these materials and some cases their staff to create time to search for them and give out. In some cases, they were too busy to give the necessary help due to their harmonious engagement.
Some respondents need constant remainders by the researcher before they could complete the questionnaires and this consumer extra cost of transportation and time while some were returned unfilled and this caused the researcher starting all over again to look for other respondents to fill and answer them.
1.5 Definition of Terms
According to dictionary.com
Is a change that is a result or consequence of an action or other cause.
This a legal agreement by which similar organization lends money to secure a house etc, and also pay the money back over a particular number of years.
Sufficient money or time to be able to buy or do something.
This is based on a simple principle: Every thing that we need for survival and well-being depends either directly or indirectly or our material environment.
These are houses, flats/apartment, etc that people lives in, especially when referring to their type, price or condition.
5.0 Findings, Conclusion and Recommendation
From the field survey carried out the result showed that most mortgage institutions in Nigeria are located in urban centre henceforth, their operations are concentrated on he urban areas. It was also gathered that the government is the major mortgage for housing development in Nigeria.
It was also observed that the effect made by mortgage institutions on housing development in Nigeria is very low in respect of access to decent houses at low interest rate, access to long term loan for housing development, reduction in the rate of unemployment, reduction in the rate of abandoned projects and progress in the building and material industries are very low.
It was also obvious from the field survey that the mortgage institutions have very high relationship terms of policies and problems which have wondered the level of effect made on housing development which includes high interest rate charged on properties, high percentage of collateral before giving out loans level of participation in the national housing fund, lack of management strategies in the implementation of the national policy objectives. Not left out are the lacks of focus in some core activities by some mortgage institution, under capitalization of some PMI’s which have hampered their effect. It was also discovered that some mortgage institutions are lacking in terms of human capital as ex-operators of universal banks and related field professionals make-up the staff strength and have resulted to poor business philosophies, which in turn results in the diversion of substantial loan able funds of PMI’s to other sectors of the economy. Despite the obstacles facing mortgage institutions towards housing development in Nigeria some measure of effect have made.
In conclusion, the study has been carried out to evaluate the effect of mortgage institutions in housing development in Nigeria. The results revealed that the interests charged on properties are too high, the period for repayment is very short and the percentage of down payment is also very high. In addition, the level of participation in the national housing fund is low; there are also cases of employers diverting workers contributions to their investment.
The major hindrances to their effect on housing development are interest rate and loan value rate, level of participation in the national housing fund, macro economic environment, non vibrancy of some PMI’s cumbersome legal regulatory frame work for long acquisition, structure of bank liability, under capitalization of some PMI’s. Insufficient access to low cost long term fund and lack of skilled human capital in mortgage institutions, consequently, they have not made any noticeable effect on housing development in Nigeria.
In order to solve the problem of housing in Nigeria and for the objectives of the national housing policy to be achieved, it is recommended that mortgage institutions in Nigeria should reduce the rate charged on properties the government, in collaboration with lending houses should develop a formular for removing various body. Hence, connected with loans, especially the issue of collaterals.
Workers should be encouraged to register with the national housing fund and measures should be placed against diversion of funds by employers, so that there will be increase in fund for housing development. It is also suggested that the schedule for the payment for the installments should be strictly adhered to by mortgage institutions once mortgage loans are approved to avoid unnecessary delay which is usually accompanied by escalating costs. For this reason, effort should be made to ensure that there are adequate funds for approved loans.
5.4 Area of Further Study
Infrastructure is one sector of the economy that is highly capital intensive, the financing of which may be so much as to require support either joint venture aid or loans. Researchers have restricted themselves over the years majority on mortgage institutions as a source of finance for housing development researcher can begin to consider carrying out researcher work on mortgage institutions as a source of finance for infrastructural development rather than restricting the effect of mortgage institutions to only the housing sector.
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