This to the main objectives of the
This chapter presents a summary of findings arrived at by the study, as regards to the main objectives of the study. Conclusions have been drawn based on such findings and some practical recommendations have been proposed. The objectives of the study were; a. Analyze to what extent the high rates exclude prospective mortgagors by matching monthly charges against the monthly salaries of the respondents.
b. To investigate the various social, cultural and religious reasons why prospective home owners choose other housing financing options, and not mortgages. c. To make recommendations that will encourage prospective home owners to opt for mortgages in the country.
5.1 Summary of Findings Having set out primarily to identify the various socio-cultural and religious factors that influence demand for mortgage facilities, the study revealed that economic factors such as income levels and interest rates influence demand much more than any other class of factors. Considering the high costs of acquiring homes, it is instantly obvious why such considerations form the crux of deliberation in the decision of prospective home owners. Figure5 provides a ranking of all the factors identified by the study to be most considered by home owners in their decision to obtain mortgages and those factors surmised to price out some home owners. Figure 5 Ranking of Factors Affecting Demand for Mortgages Source: Field Survey (2018) 5.2 Conclusions The study concludes that levels of incomes of the average Ghanaian and the high interest rates of mortgages in the country are the major factors limiting effective demand for mortgages as a housing finance option. This inference echoes the views of HFC, 2007.
Several other factors have also been identified as limiting demand for mortgages to varying degrees. 86%69%67%57%45%40%34%18%PERCENTAGE OF RESPONDENTSFACTORS IMPACTING DEMAND FOR MORTGAGESThe vast majority of people do not earn nearly to afford the mortgage facilities on offer under current circumstances, and coupled with the high interest rates and preference of self-financing, only a minority of the country’s home owners rely on mortgages as a means of housing finance. The high charges and accompanying attitudes towards debt have ensured that although 96% of respondents would prefer to own their own homes, only 32% of those consider mortgages as their favoured housing finance option.
Self-financing still remains the most popular housing finance option, although it has been known to take, on the average, 15 years to complete construction through this means. The study reveals that the ratio of self-financing to mortgages is over 3:1. This occurrence means that although growing, Ghana’s mortgage market is merely playing catch up to an already embedded in societal norms. Knowledge of mortgages remains the most sure-fire to introduce Ghanaians to the concept and encourage more people to fall on mortgage to finance housing. Although over 60% have some knowledge of the concept, the remainder have no idea that there exists such a housing finance option available to them, meaning that they will ultimately adopt self-financing if and when they decide to construct homes. If ever a solution to the housing situation and deficit is to be addressed, pragmatic solutions to reduce interest rates, housing prices must be arrived at and policy implemented.
This requires the many stakeholders to mobilize resources, educate the populace on the concept and its benefits so as to improve demand for mortgages, and thus ensure growth of the mortgage market. 5.3 Recommendations Beyond the low income levels of Ghanaians and the high interest rates, the biggest problems to the growth of the mortgage market is the deep rooted preference of self-financing and attitudes towards debt financing, a sentiment influenced by religion, culture, society and level of education. As such, the study proposes the following solutions as a means to improve demand for mortgages in the country based on its findings and conclusions reached; 1. Formulation of Flexible Mortgages The government, in consultation with the many financial institutions already involved in the provision of housing loans can come together to revise the current policies on mortgages and the repayment structure.
Currently, the highest loan repayment period is 20years, and this greatly increases the amount of regular payments required to qualify for a mortgage. An increase in the number of years to suit the income level of the prospective home owner would lead to a reduction in the repayments, and thus ensure that more Ghanaians can afford mortgages. 2. Subsidizing Housing Finance By providing subsidies for the financial institutions in the mortgage market, the interest rates can be reduced for home owners, thus increasing the number who can realistically afford to pay. The implementation of such a policy would undoubtedly draw attention to the efforts of government to improve the mortgage market, and in doing so, garner more interest in it.
3. Establishing an Efficient Title Registration System The interviewed banks cite the unavailability of title documents as a reason for denying some clients mortgage facilities. Many studies seem to iterate the existence of such a phenomenon. Given that the house would be the security, against which the loan is claimed, failure to prove ownership automatically denies one the opportunity. By revamping the title registration procedure in the country and reducing the time required to complete a registration, this problem may be reduced.
4. Increased Education of the Populace on Mortgages A joint initiative by the government, financial institutions and other stakeholders to educate the populace on mortgages as a housing finance option would go a long way to increase demand for them. Since knowledge of mortgages has been shown by the study to be major contributory factor to the low demand, increased sensitization on the benefits of mortgages over self-financing, as well as the mortgage products available in the country would help quell the many misconceptions about them. Given the impact that social, cultural and religious factors have on demand for mortgages, such revamping in the education of prospective home owners would help sway them in the direction of mortgages as a the preferred housing finance option.