EXAMINATION OF THE FACTORS AFFECTING LENDERS, (BANKS) REQUIREMENTS FOR FINANCING HOUSING INVESTMENT
Finance is an essential requirement for housing development and is seen as the lifeline in real estate development (Tibaijuka, 2002, Ojo and Ighalo, 2008, Onyike, 2009; Kuma, 2015). Tibaijuka (2002) opined that the availability of adequate housing finance is the cornerstone of any valid and sustainable shelter project, while Akinmoladun and Oluwoye (2007) noted that the poor quality and quantity of housing is mainly due to weak and ineffective access to finance. For Onyike (2007) the significance of finance underscores the wish and efforts of every civilized government to see that most of her citizens, if not all have access to housing finance and are adequately housed.
However, access to housing finance is increasingly becoming challenging for prospective homeowners particularly in developing economies. In most cases where homeownership top household’s scale of preference, they often forgo expenditures on other domestic consumptions to meet their desired goal (Kuma, 2015). In Nigeria presently, 60% of the new houses developed each year are financed through personal income and savings and sometimes with the assistance from local cooperative societies (National Bureau of Statistics NBS, 2012; Onyike, 2007; Kuma, 2015). Furthermore, a report from the Living Standard Measurement Survey (LSMS) by NBS in 2012 revealed that only 38% of households’ have formal bank accounts in South East Nigeria which equal the percentage of the overall national average and only 4% use formal credit in the development of their homes (Kuma, 2015). Perhaps that is why some literature evidence in some case studies indicates that stringent lending policies of formal institutions have influenced borrowers’ choice of finance and as well shifted their preferences to other informal sources of housing finance (Ojo, 2005; Ndibe and Kuma, 2010). This could be the reason many scholars (Onyike, 2007; Onyike, 2009ab; Akinwunmi, 2009; Ojo, 2005, 2004; Atali, 2010) posited that conventional public finance system has failed to offer credit solutions to housing needs of the majority of Nigeria.
Mortgage finance usually has several requirements in which the prospective borrower must satisfy to qualify for the loan/mortgage. The various applicants often perceived these requirements in different perspective given their experience, background and the requirement. For instance, an applicant for loan who is required to have a landed property as collaterals may be reluctant if not discouraged from securing the loan. The repayment scheme and criteria is another factor that may affect the perception of an applicant. It is certain that not all the prospective applicants will perceive the requirement the same. While one may feel collateral requirement as a challenge but to another it could be repayment plan or type of loan provided. Thus, homeowners’ perception of these challenges or factors could account for low patronage of mortgaged finance or banking loan in the study area. As already noted there is a high rate of homeownership through personal savings and other informal sources of finance. Given this, one tend to ask, what are the challenges to housing finance in Nigeria and if there is any difference between perceptions of people who have borrowed and people who have not in the study area. To help answer the above poser, the following hypothesis was formulated. Ho: There is no significant difference between the perception of people who borrowed and those who did not.