The interest rate and the economy of any nation share a relationship that is most likely symbiotic technically. The increase or decrease in interest rate impacts the economy positively or negatively including housing Finance. Housing Finance is an essential aspect of measuring economic growth as a number of factors rely so much on the housing and population and migration both in rural and urban communities. This research project topic delves deeper into the impact of interest rate on housing Finance in Nigeria. Meanwhile, let’s do a quick run-through of what interest interest rate means and what relationship it shares with housing finance.

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.

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