FACTORS INFLUENCING HOMEOWNERSHIP THROUGH MORTGAGE FINANCE AMONG CIVIL SERVANT IN NASARAWA

FACTORS INFLUENCING HOMEOWNERSHIP THROUGH MORTGAGE FINANCE AMONG CIVIL SERVANT IN NASARAWA

ABSTRACT

This study examined factors influencing homeownership through mortgage finance among civil servant in Nasarawa It identified the socio-economic characteristics of civil servants in Nasarawa town. It also investigates the housing preferences of civil servants in the study area and identified and examined factors affecting homeownership amongst civil servants in the study area. This is with a view to promoting homeownership. The study employed the use of self-administered questionnaires to obtain relevant data. The study revealed that the housing of preferences of civil servants in the study was ranked  the hierarchical order as follows, Duplex, Condominium, Flat house, Detached house,  Bungalow, Semi-detached, Terrace house, Tenement house, Row house while the factors influencing homeownership were ranked in the order below, Costs of building materials, Land acquisition, Personal priority, Salary, Marital status, Loan facilities, Land security, lending rate, parental home ownership, Gender, Age, Education. This work recommends that in other to improve and increase homeowners amongst civil servants mortgage finance, government should implement a policy that will make cost of building materials  affordable (rebate for importers of building materials), ensure that civil servants salaries are upwardly reviewed as at when and paid promptly, should ensure the mortgage institutions in the country are citizens-friendly, efficient and effective, government should also implement a policy that will make land affordable and secured, and provision of housing loans at a  relatively low lending rate should be implemented. These will really help increase number of homeowners the study area.

CHAPTER ONE

INTRODUCTION

1.1       Background to the study

Shelter is one of the basic needs of human, hence more than just a place of habitation but a personal abode of dwelling (personal home) is a dream of an average aged African and it is  enshrouded in myth about Africans. Some homes are constructed by the owners with the intent to occupy, many are inherited, and some are purchased as new homes from real estate developer or an existing home from a previous landlord or owner-occupier.

Homeownership is synonymous to owner-occupier, it is driven by the desire to improve the quality of life and as a dream of an average Nigerians, it is premised on the ease-off on rental prices, peaceful habitation with co-tenants, managing pressures from property managers or landlords, conveniences in terms of alteration, right to modify and use, and the self-fulfillment of owning a home.

According to Fetter (2013), Factors influencing homeownerships are many and broad, but the major influencing factors are; Priority of needs, access to fund, Agboola (1987) in his work recognised finance as part of home development problems. Availability of land, affordability of land, security of tenure etc. Other factors have experienced a steady increase in their impact on home ownership. In a tight money market, homeownership is the first area to suffer, since neither the builder nor the consumer can readily obtain finance for home development.

Accessibility to finance plays an important role in home ownership effort. In Nigeria today, finance is the fulcrum around which housing provision revolves, and is the most crucial element in housing investment.The availability of finance determines access to other key inputs of land, labour,materials and infrastructure (Okoroafor2007). The issue of finance is pivotal to the realization of any housing scheme. The problem arises from poor fund mobilization and current pervasive level of poverty, which inhibits savings and investment; the undeveloped nature of Nigeria’s housing finance system; absence of appropriate legal framework for efficient operation of housing finance system and general lack of awareness on the operation and benefits of housing finance system through capital markets(Nubi, 2008; Abiodun, 1999).

Homeownerships are increasing in age as well as income levels. This is most likely reflecting the steep increases in the real cost of “affordable housing.” One factor that has remained the same is the impact of race. `’No matter what the level of progression of minorities in society, economically many remain below the wealth constraint for home ownership” (Gyourko and Linneman, 1996).

A mortgage occurs when an owner usually of an interest in real property pledges his interest as security or collateral for a loan. Therefore, a mortgage is an encumbrance on property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such urban housing, Jackson (2005). Mortgage financing represents the genuine means of housing in the world’s developed economies and is also more of a challenge in developing countries. For example, United Kingdom has the largest mortgage market in Europe which is approximately 25% of the European market. In Mexico, the housing finance market is in a state of retrenchment, the macroeconomics environment has not been favorable to the development of primary mortgage market (Lea, 1996). The Mexican mortgage is highly segments with a verity of mortgage programs designed for different sectors.

In Nigeria, presently the mortgage sub sector accounts for >10% of Nigeria’s Gross Domestic Product which means that the opportunities that exist in this sector to boost the nation’s economy cannot be exaggerated. The federal mortgage bank of Nigeria puts an estimated over 10 million homes ‘as housing deficit in Nigeria; the implication of this is that with time the mortgage industry will also become large in the Nigeria capital market.

The mortgage industry in Nigeria involves few active players which are often banks subsidiaries and a collection of smaller inadequate mortgage institutions. These institutions include semi government agencies, mortgage banks and building societies. Mortgage financing has often been fingered as the most difficult constraints in the Nigerian housing sector. This study is therefore set to conduct a thorough research into the factors influencing homeownership through mortgage finance Nigerian with particular interest in Nasarawa.

1.2       Statement of the Problem

One of the major problems of homeownership has been the inadequate supply of long term funds which represents the major in issues of providing mortgages. Thus, the system has relied on compulsory savings into National Housing Trust Fund (NTITF) scheme. As a result of this, effort has been made by the regulatory authorities in Nigeria to increase the supply of long-term funds for onward lending to prospective homeowners A few of these effort include the recent recapitalization of Primary Mortgage Institutions in Nigeria, the pension and financial sector reforms and the recently promoted Mortgage Backed securities on the future of investment return in the mortgage industry. According to Agbakoba (2015), Homeownership is a desire of an average Nigerian, and most people in Nigeria still find home ownership as a major, it is interesting to note that all governments in Nigeria since Independence have always highlighted homeownership for citizens as a major priority. Agbakoba (2015) said, “There is a shortage of housing for low – income earners and constantly growing housing demands (due to increase in population) that are not met.” Unfortunately, banks are reluctant to provide mortgage facilities to low – income earners. It is against this background that this study seeks to examine the factors influencing homeownership through mortgage finance among civil servant in Nasarawa.

1.3       Aim and Objectives

The aim of the study is to examine the factors influencing homeownership through mortgage finance among civil servant in Nasarawa.

The specific objectives are to:

1. To find out if lending policies of mortgage institutions affect ownership of housing by civil servants (public sector staff) in urban centers.
2. To find out if high interest rates charge by mortgage institutions affect ownership of housing by civil servant in the study area
3. To find out if size of family affect ownership of housing or homes by Public sector staff Nasarawa
4. To examine other possible factors militating against the smooth of operations of mortgage institutions in the country.
5. To find out if availability of funds affect ownership of housing by civil servants in the study area.

1.4       Research Questions

The following are the research questions ,r

1.  How does stringent lending conditions e.g. collaterals affect ownership of housing by public sector staff in Nasarawa?
2. How do interest rates influence ownership of housing by civil servants in Nasarawa?
3. How does size Of family affect ownership of housing by civil servants in the study area?
4. How do Government regulations affect ownership of housing by public sector staff in the study area?
5. How does availability of funds affect ownership of housing by civil servants in the study area?

1.5       Significance of the Study

To the Government of Nigeria: The study will lead to the understanding of the factors that influence home ownership in urban centers in the country and therefore assist in crafting of policies tailored towards making home owner ship affordable to its citizens.

To the management of the Organizations: The study will be beneficial to them as it will assist in environmental scanning which involves analysis of both internal and external environmental factors which includes; strengths, weaknesses ,opportunities and threats.

To the consumers Lenders: The study will enable them to have various options available in the market as it will enable them be aware of the opportunities a available in the housing market.

To researchers: The study will lead to establishment and examination of the root cause of the problem under investigation, its effects and the necessary recommendations from the research findings while addressing problems of mortgage loans.

It will also be used as a basis of future studies, act as authority and reference. They will have material for future research topics.

To other stakeholders: The study will be useful in business decision making with the companies involved. It will enable other stake holders to deliberate and make important decisions on their dealing with the organizations involved.

1.6       Scope and Limitation of the Study

The scope of this study was limited to the factors influencing homeownership through mortgage finance among civil servant residing in Nasarawa. The study was mainly focusing on mortgage facilities offered by mortgage institution and the influence they had in home ownership by civil servants.

Limitations

1. Some respondents were likely to avoid questions put to them and this may result in wrong conclusions or recommendations made.
2. Un returned questionnaires could lead to inadequate data from respondents. This may affect the study by not giving the general view of lenders. However a representative sample will be selected to ensure that the findings of research are not jeopardized.
3. Due to high confidentiality of some information, it was likely that access to someinformation which was of great importance to this study might be denied.

1.7       Operational Definition of Terms

Home: According to Cambridge English Dictionary home is defined as the house, apartment, etc. where you live, especially with your family: 2. a house, apartment, etc. when it is considered as property that you can buy or sell:

Ownership: Business English Dictionary define ownership as the ultimate and exclusive right conferred by a lawful claim or title, and subject to certain restrictions to enjoy, occupy, possess, rent, sell, use, give away, or even destroy an item of property.
Mortgage: Cambridge English Dictionary define mortgage as an agreement that allows you to borrowmoney from a bank or similarorganization, especially in order to buy a house, or the amount of money itself:

Finance: Merriam Webster define finance as money or other liquid resources of a government, business, group, or individual.

Civil servant: Collins English dictionary define civil servants  as a person who works in the Civil Service of a country or state.

1.8       Background of the Study Area

Nasarawa Emirate in Nasarawa State is located in the Central region of Nigeria. It is flanked by Keffi and the Federal Capital to the North. To the South, it is bounded by Benue River and to the west; it bordered the present Gadabuka and Toto Local government area which are of course, part of the Emirate. To the East, it is bordered by Doma, Lafia and Keana Local Government Areas all of Nasarawa State.

The founding of Nasarawa Emirate in 1835 AD was the consequence of palace tussle that arose in Keffi between Umani Makama Dogo then Madaki of Keffi and Jibrilu, son of Abdu Zanga (first Emir of Keffi).

Umaru later known as Makama Dogo was born in 1958 at Ruma village in Katsina Emirate, his father was UsmanKabawana and his mother Amina. Umaru migrated to Zana , having lost his parent where he =-stayed with Emir Musa, he was accorded recognition by ShehuUsmanDanfodio, among the jihadists that captured Zana under Musa.

After receiving the flag from Danfodio, Emir Musa sent Umaru Southward of Zana to spread the Islamic faith,Umaru arrived at a place called Zana near the present Nasarawa region. He met Abdu Zanga a Fulani normad from Katsina, they both became very close that Umaruadviced them to present themselves to the Emir of Zana for recognition, this was done successfully, which triggered the granting of a request of Abdu Zanga by the then Emir of Zana to settle in a place called Keffi which was ruled by Abdu Zanga since he was the eldest with Gunki, his Madaki and Umaru as Makama.

In 1802, Keffi was famous for the exploits of the great warrior Umaru and with Abdu Zanga. A misunderstanding between Abdu Zanga and MakadiGunki later made the duo paeted ways.

On the sickbed of Abdu Zanga, he gathered his brothers and sons and told them to appoint Umaru Makama Dogo as the Emir of Keffi which was never realized after the death of Zanga  due to the betrayal to one Albarka. However , Makama Dogo was advised to move Westward of Keffi where the Kwato (Igbira) resides, fought then and established his own kingdom but he kicked against the idea and moved Yankardi, where he camped about ten kilometer South of Keffi.

Makama left his sons AhmaduManmanGaladima and ManmanSani in Keffi as a flash back. He later left Yankardi where he arrived at a place occupied by Bassa speaking people called TAMMAH, met Bagobiri known as Kasimau, who assisted him in the establishment of a kingdom called Nasarawa (meaning victorious). Makama Dogo fought many wars in the course of his Islamization, fought Afo speaking people, conquered Ubbe, Usheni, Agwadama, Itta and Gwaffa.

Makama Dogo also conquered Panda due to some misunderstandind between him and Ohimege (the ruler of Panda). Makama Dogo fought the people of Toto (Igbira people) because of the combination of Islam and traditional way of worship by the people. After fighting other kingdoms like Dogo, Agaza and Udeni, Umaru told MadakiAhmadu his eldest son to continue leadership after his death and should please be buried in Nasarawa town.

Physical Characteristics

The major things considered under physical characteristics of Nasarawa are, geographical location, temperature, rainfall, geology, wind, vegetation, humidity, soil.

Temperature

The temperatures are generally high during the day, particularly between the months of March and April. The main monthly temperatures in the state range between 20⁰C and 34⁰C with the hottest months being March/April and the coolest months being December/January.

Rainfall

The study area experience dry season without or little’s rainfall from November to March of about 95mm, which is wet season is from April to October of about 1.30mm,

Geology

From the Jos Plateau, this comprises of basement complex metamorphic rocks, granite and basalt of two or more ages. The basement complex is covered by shadow soil.

Wind

Nasarawa local government is determined by the seasonal movement on inter-tropical convergence zone [ITCZ], which represents the moving frontier between the moist Atlantic air from the south and the dry air from the north. In the dry season from November till March the north east wind are dominant. For the remaining of the year, the south-western winds are prevailing. Generally, the wind velocity is relatively low.

Vegetation

Nasarawa is situated in the Benue valley between the Benue river and Jos Plateau. This area lies within the part of southern guinea savannah. The vegetation of Nasarawa has, to a large extent resulted from extensive agricultural use of the land, the predominant vegetation type is partly savannah which is characterized by a discontinuous canopy, shrubs and grasses many areas are affected by man through bush burning during the dry season. Among the common trees are oil bean trees, locust bean free and isoberline trees.

Relative Humidity

The relative humidity is the measurement of deepness of the atmosphere which varies from place to place and different time of the day. The level of humidity in Nasarawa state in January is quite less that 40% which rises as from February to July to about 88%. By April when the steady rain commences it will be about 75% by August when the inter-tropical discontinuity is at it northern part, must position of the entire state will experience tropical marine wind and continues till December.   

Soil

The major soil units of Nasarawa belong to the category of oxisols or tropical ferruginous soils. The soils are derived mainly from the basement complex and old sedimentary rocks. Lateritic crust occurs in extensive areas on the plains while hydro orphic soils (limbic incept sols) occur along the flood plains of major rivers (Nyangba, 1995).

Socio-Economic Characteristics Nasarawa main economic activity is agriculture; cash crop, such as yam, cassava and egusi (melon). Production of minerals such as salt is also another main economic activity of people in the state; Nasarawa produces a large proportion of the salt consumed in the country.