What is interest rate?
Interest rate is an amount a lender charges a borrower for a loaned asset. The interest rate is often charged in percentages - technically a percentage of the total amount loaned.
Housing Finance in Nigeria
Housing finance is used to describe financial resources, other than that of the individual, that are made available to finance land purchases, building construction and housing.
Housing Finance in Nigeria is very important as long population and migration and urbanization is concerned. In Nigeria, factors related to population growth, unemployment, rural-urban migration are contributory elements to urbanization growth and the need for housing Finance.
According to a report dated (2016) by the World Bank Group, when housing increases especially when it is to the reach of low income earners, it stimulates job creation and this is grossly associated with economic development.
The relationship between interest rate and housing Finance
Interest rate is determined by a number of factors and one of those is the state of the economy. When the interest rate increases, it discourages borrowing and fuels savings. But when the interest rate is reduced, it encourages borrowing and investments boom but not without a downside in the long run, like inflation.
Interest rate reduction stimulates housing Finance, it makes mortgage loans very accessible compared to when Interest rates are high. With low interest rates housing production increases and so does access to residential lands, effective land administration, legal protection, house availability at low market prices
In summary, interest rate is a major stimulant of housing Finance. But the in-depth understanding of how this works is available in this research project.
Editor's source
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