Notes on
Government Initiatives for Mortgages in Ghana
In Ghana, the housing and mortgage sector
has witnessed various government-led initiatives aimed at improving affordability
and accessibility to homeownership. One key example is the National
Housing and Mortgage Fund (NHMF) and related schemes under the broader
framework of housing development strategies.
Key
Features of Government Mortgage Initiatives
National Housing and Mortgage Scheme (NHMS):
Affordable Homeownership: The NHMS
provides a pathway for average earners, including civil servants, to own
homes. It offers two-bedroom houses at prices as low as GHS 200,000 and
sometimes lower, with payments structured to be affordable.
Rent-to-Own Model: Under
this scheme, tenants' rent counts as mortgage payments. This eliminates
the need for large upfront deposits, making homeownership more
accessible.
Blended Financing Model: The
scheme uses a unique financing structure where half of the mortgage cost
is funded by commercial banks at market rates, and the other half is
subsidized by the government at a significantly lower rate (2%). This
brings effective mortgage rates to around 9.5%–10%, much lower than
traditional rates.
National Homeownership Fund (NHF):
Focuses on reducing the cost of housing and provides
developers with incentives to build affordable homes.
Encourages partnerships between the government and
financial institutions, ensuring sustained funding for affordable housing.
Promotion of Real Estate Investment Trusts
(REITs):
Aims to mobilize private-sector investment into real
estate projects, thereby increasing the supply of affordable housing
units.
Public-Private Partnerships (PPPs):
Initiatives like the Revised National Affordable
Housing Program rely on PPPs to leverage government resources and private sector expertise for housing projects.
Challenges
in Implementation
Funding Limitations: The
government relies on tax revenues for its share of subsidized mortgage financing,
which faces competition from other fiscal needs.
Bank Participation: Only a few
banks currently participate in these schemes. Efforts are ongoing to bring
more banks into the fold, but challenges related to profitability and risk
deter broader involvement.
Demand-Supply Mismatch: While
initiatives aim to boost supply, demand for affordable housing still far
exceeds available stock.
Economic Factors: High construction costs due to
reliance on imported materials and currency instability further complicate
affordability efforts.
Impact on
the Housing Market
Increased Accessibility: By
targeting middle-income earners and offering rent-to-own models, the NHMS
and related initiatives have lowered barriers to homeownership.
Market Stabilization: Guarantees
for developers under these schemes ensure quick sales of housing units,
reducing risks and construction costs.
Policy Innovation: Efforts to
digitize land registration and secure tenure aim to simplify the
homebuying process and reduce disputes.
Government initiatives like the NHMS and
NHF have been pivotal in addressing Ghana’s housing challenges, but sustained
efforts are needed to expand these programs, attract private investment, and
create a secondary mortgage market to support long-term financing needs
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