I was shocked at the revelations from a mortgage specialist
I was at Greda housing fair sometime back . I met a mortgage specialist. Being familiar with the system, he ended up just telling me about how he hated it the more which was quite surprising. A mortgage specialist offering mortgage services to prospective, you will think the first thing he should do is try hard to persuade you to get a mortgage but no, he was angry with the system, he was passionately voicing out his concerns. He took me through the loopholes, how albeit the government is trying to be supportive, their policies do not half solve the bigger problem. How their initiatives is just not enough.
Civil servants may be happy about the subsidised interest rate but..
Even under a subsidised interest rate initiated by the government to encourage mortgage firms like Republic bank to help home seekers acquire their dream property. It’s still not enough and feasible for an average worker in Ghana to purchase such affordable housing.
Point to note, affordability of a 120,000 Cedis home which is probably a single bedroom unit may not necessarily be un-affordable based on the quoted figure.
- Many factors come into play like the system put in place for the average person to purchase and like dependency ratio of the citizens, we must also add the salary range of the target market or prospective buyers.
In most of the areas central to Accra for instance, the average cost of homes fall within the range of 200,000-300,000 Ghanaian Cedis. To qualify for a mortgage at the subsidised interest rate of 11.9% per annum in one of the leading mortgage institutions, one needs their salary to be 3100 Ghanaian Cedis. One needs to be a government worker. Even with that, you can only qualify for 140,000 Cedis loan at the subsidised rate. 140,000 GHS can only buy a single bedroom house, except if you want a location too far from the economically viable centres.
The effectiveness of mortgage for the working class
Looking at these criteria and considering the number in the working class that will earn 3100 GHS and above. It’s just not feasible for mortgages to be a popular choice amongst such group. In order to earn 3100 GHS and above as a civil worker it means you have attained a really high position.
By that time, you might have reached somewhere between 35-40 years old. Which means you will end up paying for a 20 year mortgage until you retire. Or let’s just say, you might spend your lifetime paying off the mortgage. Analysing that critically, it won’t be a better option especially knowing very well that you are paying interest on it. Meanwhile, it’s agreeable that renting is not a better option also.
Other factors that make current mortgage arrangement unworkable
Another critical point is that, once your age falls between 35-40, It makes one likely to get married. Of course you are not likely to choose a single bedroom and if you live in Accra where houses are more expensive you will probably try to choose a location central to most business centres otherwise you would spend your savings on transport.
You see I could go on and rant about the system transfer the exact energy from the mortgage specialist; about how mortgages do not favour the very people they are targeting, about how government is inconsiderate towards the very citizens whose average wage falls between 500-2500 GHS. The question begs that would it be a form of hope to raise issues concerning mortgages?
What is the sustainability of such mortgage systems or policies
Moreover what’s the sustainability of such subsidised mortgage system for the banks if most of the people who qualify for it are the richer folks and not the middle income earners. And we know richer ones will purchase outright to avoid high interest payment.
All of these may not be holistically addressed with all the expressions In the world. But we must bear in mind that regarding housing and ease of owning a dream house, we are all stakeholders. That’s why we must consider all these when issues of What Matters Most Arise. Policies that matter most. Housing needs and systems affect every individual including children therefore we must keep advocating for housing policies that matter most.
The writer is a blogger and a real estate enthusiast at www.floatghana.com He blogs about construction, real estate and housing Including interior design.
