The Growth and Challenges of Mortgage Origination in Ghana

Low income levels coupled with huge capital requirement to buy a house has brought about the crucial need for mortgage financing in the housing sub-sector. Equity financing has a different role than debt financing and is especially important in poor countries where most of the population may not qualify to debt financing anyway due to high income instability. A number of researchers conducted analyses at borrowers’ constraints to access the large availability of these funds. Few studies have, however, focused on the supply side of the industry, specifically ascertaining growth of the industry and the constraints to its activities, thus forming the purpose of this study. Data was gathered through interviews and the use of questionnaires administered to 6 of the major mortgage lenders in Ghana between February and March 2014. The results show there has been a significant growth of mortgage origination as indicated by GH¢57.9 million in 2008 to GH¢341.7 million in 2013. This annual growth caused a steady increment in the ratio of mortgage-debt to GDP evidenced by 0.24% in 2008 to 0.39% in 2013. The performance of the mortgage industry is largely beset by the lack of secure and transparent land title. Other constraints include: macroeconomic instability and the lack of access to long term funds to originate debt instruments.