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

1. 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.
2. 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.
3. 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.
4. 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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