Title page i

Certification ii

Dedication iii

Acknowledgement iv-v

Table of content vi-vii


1.0 Introduction 1

1.1 Objective of the study 3

1.2 Hypothesis formulation 6

1.3 Limitation of the study 8

1.4 Organization and plan of the study 9


2.1 Literature Review 11

2.2 Need for housing finance 14

2.3 Factors hindering mortgage finance in Nigeria 17

2.4 Roles of state housing development authority in housing finance 19

2.5 Effect of economic recession in the country on the operation of FMBN. 21


3.0 Research methodology 24

3.1 Introduction 24

3.2 Method of collection information 24

3.3 Research population and sample 25

3.4 Historical Background of federal mortgage bank of Nigeria (FMBN). 26

3.5 The roles of PMIS is solving Housing 28

3.6 Loan administration of FMBN 30


4.0 Data analysis and presentation 32

4.1 Introduction 32

4.2 Data Analysis 32

4.3 Respondents by variables 35

4.4 Analysis of Research Questions 41


5.0 Summary, Conclusion and Recommendation 47

5.1 Summary 47

5.2 Conclusion 48

5.3 Recommendation 50




Since the creation of man, he has been faced with three basic problems via: Food, Shelter and clothing. Man in an attempt to solve these problems has undergone serious of trials to which no end is tat sight. The problem of food is still the problem of mankind. The problem of shelter and clothing is still paramount to any given society. Shelter is universally accepted, as essential human needs that man cannot do without. Some people rank it second to food in the hierarchy of man’s needs.

Shelter is also paramount in the mind of every man that he is prepaid to give up other needs to have one, having one at least is seen and rightly too as a mission accomplished. In the bid to solve these problems, more and more problems are being encountered.

In any give society, the government takes it upon them to see that three basic needs of nature are handled so as to pose at least a minimum problem to the society. In Nigeria like any other developing nation, housing a monstrous problem. Particularly in our urban towns. Since independence in 1960, government policies have been directed towards effective housing delivery in order, to make life better and increase productivity, but the achievement are below expectation because of many other demands on the government resources.

The persists increase in population, devaluation of Naira through foreign exchange market, hyperinflation rural – urban migration have resulted into over crowded homes ,increasing pressure non infrastructure facilities, thus accounting for the regularly deteriorating environment and usually collect savings and deposits from the public but mainly depends state government budget allocation for direct housing development, local thrift institution are usually not mortgage finance institution as properties are rarely accepted as collateral. Thus mortgage banking, as specialized development banking becomes obvious.

Between 1987 and November 1993, the federal mortgage Bank of Nigeria licensed 251 primary mortgage institutions. Although, most of the PMIS were concentrated in the urban centre especially Lagos, this could however, finance landed properties in any part of the country.

This study shall discover how far the FMBN has been able to achieve its objectives, consider its contribution to the economy so far, its problems, way of solving them, its prospects and also recommend ways to improve its services or keep its existence.


The reason behind the study of this type centers on the environment and the quality of human existence, which has a direct relationship with the environment in which we lives. This environment comprises mainly the devilling houses it is the intention of this research work to look into the finance of housing/ shelter, which should be the priority of every government, most especially where its supply is inadequate. The study of this topic is very essential considering the fact hat the mortgage institution are the pillar of the construction industry which of not well handled in an economy like our will lead to a downfall of the construction industry which if not well handled in an economy like our will lead to a downfall of the construction industry.

Housing, as a capital intensive project without private sector participation in provision of finance and other infrastructure to complement the efforts of the government made the achievement so significant until 1989 when primary mortgage institutions (PMIS) Decree 53 of 1989 was promulgated.

The major reason for the promulgation of decree 53 of 1989 and Decree 3 of 1992 were to address the paucity of long term work for housing delivery of segmentation in housing finance system, high cost of borrowing and of building materials. From available facts, 70% of Nigerian fall within the poor and, low income bracket, while, 5 million housing units were established to be  required to meet the existing and future need of the urban area, 3 millions housing units estimated for people in the rural area up to the year 2000 A.D.

Decree investment in property can take several forms. The invested can invest in different types of property, it could be informed by factories, warehouses, moreover, in residential property, it could be in form of houses flats or agricultural.

Mortgage bank or institutions specialized in mortgage banking creation; they provide loans for this purpose. Mortgage Banking institutions can accept only interest inland as a security. Housing cooperative are housing finance institutions but not mortgage banking as they do not spending by the people, one is tempted to say that the mortgage institutions will have a difficult time in carrying out those objectives.

It is the intention of research work to study the following:

i. The effect on loan repayment with regards is the unfavorable economic condition of our economy

ii. To appraise the operations of then federal mortgage bank of Nigeria in order to know whether there is nay operational Nigeria in order to know whether there is any operational charge in loan disbursement since inception.

iii. To appraise the need of mortgage finance and favourable conditions of the federal mortgage of Nigeria.


Based on the complexity of our economic society historical background and interactive review three hypotheses will be derived and tested alternatively by the study.

Ho: The contribution of housing by FMBN is not well known to the people

Hi: The contribution of housing by FMBN is well known to the people

Decision rule: Accept Ho and reject Hi, if calculated value is greater than tabulated value.

Hypothesis II

Ho: The terms of mortgage loan by FMBN is not suitable to it customers

Hi: The terms of mortgage loan by FMBN is suitable to its customers.

Decision rule: if the calculated value is less than the tabulated value, accept Ho and reject Hi.

Hypothesis III

Ho: Disbursement of mortgage loans has no impact on mortgage in Nigeria.

Hi: Disbursement of mortgage loans had impact on mortgage finance in Nigeria.

Decision rule: if the calculated value is less than the tabulated value accept the null hypothesis and reject the alternative hypothesis.


Due to non-availability of data and other costs involved in a research of this nature, if of interest to limit this study on the structural and operational aspect of the mortgage bank of Nigeria.

Particularly attention will be paid to mortgage loans advance, to customers and the effect of the economic condition of Nigeria on repayment, the federal mortgage bank of repayment, the federal mortgage bank of Nigeria. Was chosen as the case study, due to the scope and dimension of its operation and its long range of contribution to the economic development.

It is of interest to note that prevalent government policies of privatization and commercialization and temporary closure of parastatals thus threatening job efficient and productivity.

The former problem would be tacked by making do with available statistics from the records of the FMBN while the letter would be dealt with by critical examination of the decree itself.  


This research will has been divided into five chapter one deals with the introduction and other peripherals of the research.

Chapter two reviewed the existing literatures in the banking industries to know the evolution of government intervention in the sector and the reason for the intervention.

Chapter these focused in the research methodology the source of data collection method of collecting information the data presentation and analysis, method of testing hypothesis and the questionnaires.

Chapter four deals with the historical background of FMBN, the organizational structure of FMBN, role of FMBN in solving housing problems in Nigeria and then loan administration of FMBN.

Chapter five contains the summary, conclusion and recommendations.CHAPTER TWO


The essence of this chapter is to examine relevant literatures clearing with organization structure productivity and their relationship with the internal operations of the federal mortgage bank of Nigeria. Many has written and researched into than overall activities of federal mortgage bank of mortgage finance on the economy in the right of economic, recession in the country.

The Nigeria housing problem from global perspective shows that our problem essentially are not unique to us. Actually, most urban dwellers are poor for example the 200m city dwellers estimated to be living below an absolute poverty three sold in developing countries in 1980 would be doubted by the year 2004.

The situation in Nigeria is not different the high population growth rate, rural urban migration and urban shift have resulted in heavy demand pressure in the housing market with the need of the lower income group reaching a crisis proportion.

The supply responses are weak due to the system constraints such as the nature of interaction and lack of adequate construction inputs. The housing delivery system in terms of land building materials, financing infrastructure and social amenities is poor and it discriminates against lower income families through its eligibility requirement, standards and norms. 

The consequence have been his and homelessness with serious implication to the social fabrics.

The housing situation has further worsened in recent time. the deregulation of interest rate in 1986 has posed upwards the interests rate on loans therefore reducing the affordability of many more Nigerians. Given the dependence on importation. Sharp depreciation of employee rate has contributed to high prices of building materials, this increasing the hard cost of housing construction G.A Onatoule (1990).

According to Nwankwo (1993), housing as a basic need of man, being the research and project development of federal mortgage back of Nigeria. Enugu Branch has his to say “A critical component of man is basic need approach to economic reality which is shelter I next to food, shelter is considered the next most important basic need of man.

On the financial side, the flow of funds to the housing sector as often blocked by regulations designed to direct credit to favoured sector such as heavy industry and apart from regulations that affect the price and availability of inputs, other government regulations affect the housing market directing.

He stressed further that the task of accommodating the unprecedented increase in the number of Nigerians and improving their living standard posses major challenges not only for urban development in general. However, inadequate and insecure shelter often leads to social and political instability and hamper economic development. In essence global shelter condition are closely linked to the achievement and maintenance of world peace and economic stability (S.O Olokun,1995).




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