Constraints facing the home mortgage finance scheme in Ghana, a case study of Kumasi HFC Bank (Ghana) Limited

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Housing is one of the most important assets and a basic necessity mankind cannot do without The Unite Nations General Assembly Resolution in 1998 to approve the global strategy for shelter to the year 2000, acknowledged the pressing need for decent housing in the developing economies. In Ghana, the opportunity to own a house involves outright payment for it, build over a period of time, or fall on the services offered by the housing mortgage finance institutions. It is fact that the housing services offered by these mortgage finance institutions are beyond the affordability of majority of shelter seekers. The objectives of the study are to identify and thoroughly investigate the factors affecting the home mortgage finance scheme in Ghana and how to address them. Using HFC Bank (Ghana) Limited as a case study, the research examines the role of mortgage finance institutions in the housing delivery in Ghana. The research revealed that, income levels of workers, land acquisition, the macroeconomic effect of inflation and the problem of liquidity due to low savings rate of households were the main factors affecting the administration of the home mortgage finance schemes in Ghana. High interest rate cost, borrowers default in the repayment of loan, unemployment and difficulty with regular flow of fund were also drawbacks to the scheme. The research strategy adopted included survey method via the use of questionnaires, interviews and observations. All kinds of publications, annual reports and newsletters were consulted. The method of data analysis entails the application of nonparametric statistical test. The study concludes by recommending that, a micro finance scheme be formed and the establishment of a national housing development fund to cater for the low and moderate-income households’ financial needs. The study recommends further that, an efficient policy on land acquisition be implemented to ensure effective and efficient land acquisition for housing development in Ghana. Finally, the study recommends that, government should adopt policy to control interest rate and inflationary pressures to ensure effective and efficient lending and borrowing in the housing mortgage finance market in Ghana.
A thesis submitted to the Department of Economics and Industrial Management in partial fulfilment of the requirements for the award of a Mater of Arts degree in Economics, 2005