The Growth And Challenges Of Mortgage Origination In Ghana

Low level of income coupled with the huge capital requirement to buy housing has brought about the crucial need for mortgages. Debt finance has been tested and found to be the most effective mechanism as opposed to equity finance in housing finance. A number of research conducted look at borrowers’ constraints to access the large availability of these funds. Few studies however have focused on the supply side of the industry specifically ascertaining the industry’s growth and constraints to their activities, thus forming the purpose of this study.The data for the research was gathered through interviews and use of questionnaires administered to 6 of the major mortgage lenders between February and March 2014. The results show that there has been a significant growth of mortgage origination indicated by GH¢57.9 million in 2008 to GH¢341.70 million in 2013. The annual growth has caused a steady increment in the percentage 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 lack of secure and transparent land title and low levels of income. Other constraints are macroeconomic instability, and access to long term funds to originate debt instruments is lacking.It is recommended that the bureaucracies and delays surrounding title registration should be reduced to accelerate the process of land and title documentations. Furthermore, institutions must consider using pensions and life insurance funds as alternative of long term funds. Finally, government must ensure to create a stable macroeconomic environment for lending (inflation, currency depreciation and base rate).