Impact of Commercial Banks’ Mortgage Financing on Meeting Customers’ Housing Needs in Owerri Municipal, Imo State, Nigeria

Abstract

Housing has been observed to be a fundamental basic need of man just as food. Good housing is very crucial to the survival, health and well-being of every man hence, one of the best indicators of a  person's standard of living . That is why the issue of housing have received a prominent position in most political and social debates all over the world. This study aims at examining the impact of participation in mortgage financing by commercial banks on their customers’ housing needs in Owerri municipal, Imo State, Nigeria. This is with a view to evolving  more pragmatic strategies of financing mortgages through banks. To achieve this, The hypothesis that commercial banks mortgage loans have no significant  impact on meeting  customers’ housing needs in Owerri municipal, Imo State, Nigeria was formulated. The  study adopted the survey research approach. The population of the study was 1260 made up of 15 management staff of the three commercial banks used for the study namely: Union Bank of Nigeria, United Bank of Africa and First Bank of Nigeria for the lenders, and 1245 customers of the banks for the borrowers. All the banks are of Owerri municipality, Imo state branches. The sample size of population of the study for the two groups was 315. For the lenders, it consisted of all the 15 management staff of the three banks while for the borrowers, a sample size of 300 was taken which was arrived at using the Taro Yameni formular. The convenience Non-probability sampling technique was used to collect  information from  the 300 borrowers of the banks,  100 customers from each of the banks while the entire 15 management staff were sampled. A researcher’s designed questionnaire titled “Commercial Banks Participation in Mortgage Finance Questionnaire (CBPiMFIQ) was used for data collection. The reliability coefficient of CBPiMFIQ was ascertained using test-retest method and the Cronbach coefficient Alpha method formula. The formula gave a reliability index of 0.72. Data collected from the respondents were analysed using descriptive statistics of weighted mean to answer the research questions and multiple linear regression model was used to test the impact of participation in mortgage financing by commercial banks on their customers’ housing needs. The analysis was done using SPSS IBM version. The results from the data analysis showed the following findings among others. It rejected with a mean score of 1.47 that the commercial banks in Owerri Municipal, Imo State, Nigeria, have mortgage loan package for low-income earners; and that the commercial banks requirements for accessing mortgage loans or housing finance in Owerri municipal, Imo State, Nigeria are registered land title, adequate source of monthly repayment, approved building plans and tax clearance (with a mean score of 2.0 respectively) and again, it was rejected with an average mean of 1.68 that all categories of customers are meeting the requirements for accessing mortgage loans from the banks. The result of the test of hypothesis  finally showed that the Commercial Banks’ Mortgage Finance has no significant impact on meeting customers’ housing needs in Owerri Municipal, Imo State, Nigeria. Based on the findings and conclusions drawn, the following recommendations were among others put forward. That commercial banks in Owerri Municipal, Imo State, Nigeria, should intensify their sensitisation  of the public on the need and advantage of long term mortgage savings; and that commercial banks should design mortgage savings and loans product to take care of low income earners’ housing needs especially civil servants who have regular source of income.

Keywords: Housing, Commercial banks, Housing needs, mortgage finance.