Assessing the role of mortgage in private housing finance in Ghana (A Case Study of Kumasi Metropolis)

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August, 2015
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The increasing trend of housing deficit in Ghana raises much concern and interest in delving into housing delivery in the country. The annual housing demand of about 100 000 units is not being met, with only about 40 000 housing units currently being delivered per annum. Apparently, the state‟s effort alone has not been significant in curbing the problem and therefore calls for Private individual involvement in the housing delivery. These strategies apparently depend on the income level of households, meanwhile majority of indigents are low income earners; this calls for other source of funding to Private Housing. Against the backdrop that mortgage industry has proved to be the most capable financier of housing in advanced countries; calls for the study that investigates the role mortgages play in complimenting personal income of individuals in financing housing projects in Ghana as well as making recommendations to improve upon it. The study which was limited to Kumasi Metropolis employed 160 questionnaires administered to both households and mortgage Firms. The findings of the study revealed that majority of household still have negative perception about mortgage loans, as they claim of mortgage loans attract higher interest rates, involves high bureaucracy in documentation; meanwhile a whopping majority of the households are not even aware of the existence and operations of mortgage firms. The study also revealed that majority of the respondents spends between 21%-30% of their income on housing, representing higher proportion of their income. The study recommended that mortgage firms increase their publicity and advertisement on mortgage loans and products so as to increase the awareness on the part of the general public. It was also recommended that the government and the central Bank held joint talk with mortgage firms so as reduce the interest burden that follows mortgage loans through reduction of prime rate and strengthening of the credit referencing bureaus in the country.
A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Master Of Business Administration (Finance –Option),