The President of the Republic, Nana Addo Dankwa Akufo-Addo, has commissioned 204 housing units, constructed in nine months, under the National Mortgage and Housing Finance Initiative.
The project comprises one, and two standard and expandable unit bedrooms for public sector workers.
Commissioning the housing units, on the second day of his tour of Greater Accra, on Monday, October 26, 2020, President Akufo-Addo described the completion of the 204 housing units as “one of the successes achieved during the two-year pilot phase of the National Housing and Mortgage Fund (NHMF).”
Under this arrangement, GCB Bank Limited will be underwriting the mortgages to public sector at rates far below market rates, and with longer tenor.
Over the years, the country has suffered a huge housing deficit, especially in the urban areas. The country currently has a housing deficit exceeding two million housing units, despite an annual supply of about 40,000 housing units. With this, the country is unable to meet the annual demand of some 70,000 homes each year.
The demand-side challenges of home ownership, President Akufo-Addo explained, include the lack of adequate long-term funding, high cost of capital and high non performing mortgage loans. In addition to restrictive banking regulations, high interest rates on mortgages have reduced the appetite for mortgage financing.
Eager to fix the demand–side challenges of home ownership, government, in 2018, approved the National Mortgage and Housing Finance Initiative, with the aim of stimulating the local currency mortgage market.
“In operationalizing the initiative, the National Housing and Mortgage Fund (NHMF) was set up to pilot two schemes – the National Mortgage Scheme (NMS) and the Affordable Housing REIT’s (rent-to- own) scheme. The Fund is now working with players in the housing market, that is, home buyers, developers and banks, to address the issues and create an enabling environment for a thriving housing market,” the President said.
Under the National Mortgage Scheme (NMS), mortgages are being underwritten at rates of 10 percent to 12 percent by the participating banks namely, GCB Bank Limited, Stanbic Bank Ghana Limited and Republic Bank Ghana Limited. This intervention has indeed reduced mortgage rates by over 60 percent, compared to the average market rate of 28 percent.
The Affordable Housing REITs is promoting the rent-to-own scheme with only monthly rent payments and, after a period, the occupant has the option to own it. On the other hand, the rent-to-own scheme will eliminate the burdened two-year rent advance system, and designed to give low income workers the opportunity to rent and eventually own homes, with the focus on apartments and inner-city rehabilitation.