12 Banks shun mortgage financing

Twelve out of the 31 banks in the country do not offer mortgage loans to customers, data from the Bank of Ghana (BoG) has shown. The data, which was released in the week ending February 17, showed that Access Bank, Capital Bank, Energy Bank, Fidelity Bank, First Atlantic Bank and First National Bank do not offer mortgage loans.

Others include GT Bank, NIB, Omnibank, Societe Generale Bank, Sovereign Bank and the Universal Merchant Bank.

The data on the Average Percentage Rate and Interest Rate (AI) also revealed that Unibank Ghana Limited charged 45.5 per cent interest on mortgage loans, making it the highest in the sector.

Standard Chartered Bank and the Bank of Baroda charged the lowest interest rates at 18.4-33.0 per cent and 24.5-28.8 per cent, respectively.

UBA Bank, HFC Bank, Stanbic Bank, Zenith Bank and ADB were also charging 32.4 per cent, 31.1 per cent, 29.4 per cent, 29 per cent, and 28.9 per cent respectively.

The industry average of interest rates that consumers were paying on mortgage loans stood at 33.3 per cent.

Housing deficit

The Executive Secretary of the Ghana Real Estate Development Association (GREDA), Mr Samuel Amegayibor, told the Graphic Business in an interview that the decision by some of the banks not to give mortgage loans and the high interest on them was one of the reasons for the increasing housing deficit.

He said most of the housing deficits were coming from low to middle-income workers who were finding it difficult to acquire decent accommodation due to the high cost of houses in the country. He believed that decision of some banks would only worsen the situation.

He therefore urged the banks to support the industry to come out with well-structured mortgage products to address the challenges of people in the low-income bracket.

Until this is done, he said, the country would not get anywhere in its fight against the housing deficit.

The country’s housing deficit keeps widening as many citizens have been unable to afford decent accommodation.

It is estimated that the country’s population could reach 32.2million in 2020, with about 57 per cent living in urban communities, a situation that will compound the current housing deficit and require a concerted effort.

Currently, the housing deficit is estimated at 1.7 million units -- a figure that has been thrown into doubt by experts who contend that it’s possibly more -- with an annual growth rate of 70,000 housing units.

The Ghana Real Estate Developers Association (GREDA) also estimates that about 50 per cent of Ghanaians live in sub-standard housing and various unsuitable structures.

 The lack of planning and uncoordinated effort, poor policies and the recent imposition of VAT, difficulty with land acquisition, as well as lack of cheap sources of funds among others for private sector developers to tap into, are some of the major challenges bedeviling the sector.

Lack of mortgage products

Mr Amegayibor said one of the challenges was also the lack of mortgage products in the market.

“Generally we have very little mortgage products in the country. The ones that are available now too are very expensive and it’s not even easy to meet the criteria for getting such products,” he stated. — GB