Effect of Mortgage Market on Household's Finance in the Cape Coast Metropolis

Abstract

Guided by the mortgage value theory, this study analysed the impact of mortgage market on household finance, with focus on clients who have obtained mortgage products from Republic Bank within the Cape Coast Metropolitan Area. To address this general objective, two specific research objectives were set, namely to: establish the costs borne by clients of Republic Bank when accessing mortgage finance; and examine the impact of mortgage financing cost on household income. Research approach was quantitative, research design was descriptive, and study design was cross-sectional. All salaried workers who have accessed mortgage products at Republic Bank in the Cape Coast Metropolitan Area, numbering 154 formed the study population. Owing to the size of the population, a census was employed. Purposive and convenience sampling techniques were utilised. A semi structured, validated and self-completed questionnaire was employed. 118 out the 154 targeted mortgage clients responded to the questionnaire, leading to a response rate of 76.62%. The non-response rate was 23.38%. One-sample t test was conducted using IBM SPSS Statistics software, version 23. This study found that mortgage clients were overburdened with high deposit requirements, extortionate interest rate, standard initial down payment of about 20%, payment facility fees, payment of legal/property title search fees, and pay surveyor’s fees. To add, this mortgage financing costs negatively impacted on the income of mortgage clients. The study concluded that fees, charges and payments associated with acquiring residential mortgage was a drain on the income of households in Ghana. Recommendations have been made to improve on the existing situation