Mortgage Financing and Sustainable Housing Development in Nigeria

Abstract

This study examines the effect of mortgage financing on sustainable housing development in Nigeria, with emphasis on mortgage loans, institutional coverage, mortgage repayment-to-income ratio, and macroeconomic stability. Using an ex-post facto research design and annual time-series data, the study applies the Autoregressive Distributed Lag (ARDL) model and Error Correction Mechanism (ECM) to assess both long-run and short-run relationships. The ARDL bounds test confirms the existence of a long-run equilibrium relationship among the variables, while the error correction term indicates a rapid adjustment to equilibrium. The findings reveal that mortgage loans have a positive but weak impact on housing stock, reflecting the shallow nature of Nigeria's mortgage market, whereas institutional coverage and mortgage repayment-to-income ratio significantly influence housing stock with lagged effects, highlighting the roles of institutional efficiency and affordability. Macroeconomic stability emerges as the most significant determinant of housing stock growth. The study recommends deepening the mortgage market, strengthening institutional frameworks, improving housing affordability, and maintaining macroeconomic stability to achieve sustainable housing development in Nigeria.