A Study Of The Sources Of Finance For Home Ownership In Ghana: Assessing The Role Of Mortgage Banks In Financing A Study Of The Sources Of Finance For Home Ownership In Ghana: Assessing The R

ABSTRACT Food, shelter and clothing are considered as the most basic necessities in life. Abraham Maslow in his Theory of Needs puts the need for shelter as the next basic need after man has satisfied his need for food which is the first basic need man has. In this light, this study aimed at investigating the main source of finance for homeownership in Ghana as well as the contribution of mortgage loans on housing finances. The study adopted quantitative and qualitative research approaches and the research design adopted was the descriptive. Questionnaires were administered to 400 household members and interviews conducted for 5 officials of mortgage banks. This was how the data sampled and analysed was collected. The findings revealed that, Personal loans, Mortgage loans and Personal income were the major sources of finance for homeowners in Ghana with Personal income being the preferred choice of most people. The findings also revealed that, there was a low patronage of mortgage loans as a result of factors such as high interest rates, shorter repayment periods, modes of payment and cumbersome processes involved in the accessibility of mortgage loans. The findings also showed that, most of these homeowner or renters tend to use some portions of their personal income or savings to finance their homes and the proportion used mostly ranged between 10% - 40%. The findings also showed that, there was negative perception of mortgage loans from the perspective of Ghanaian homeowners due to reasons such as bad experiences, shorter repayment period of loans, high interest rates and mode of payment. The findings again showed that, over the years, some banks and mortgage firms have improved on their services especially with regards to attracting customers to patronize their loans. It was found that, banks such as Republic, Stanbic, and Fidelity as well as Ghana Home Loans(GHL) keep improving over the years. However, the current trend showed that, the leading banks where patronage of mortgages was first and second were Republic and GHL. Finally, the findings of the study showed that, Low Financial Literacy among Ghanaians, Credit Risk, and Low Access to long term funds, Bureaucracy with Property Registration, Inadequate Banking Sector Capacity, High Lending Rates, Low Income Levels and Length of Time of Foreclosing deals were all obstacles which hindered the development of the mortgage industry. From these findings therefore, the study recommends strongly to players within the mortgage industry to revise their policies especially on payment terms and interest rates and also adopt friendly policies in terms of treatment given to clients who default with loan repayment.