Head of Mortgage Banking at Republic Bank Ghana, Dan Adjetey Mohenu, has commended the Bank of Ghana for its efforts in driving down interest rates, while also urging the central bank to push them even lower, arguing that reduced interest rates make mortgages more accessible.
Speaking exclusively to Business Outlook Africa, Dan Adjetey explained that interest rates are a key component in determining who gets access to mortgages and who doesn’t.He addressed that when interest rates are high only high-income earners or middle income earners can make use of mortgages but when they are low, low income earners can make use of mortgages as well.
Head of Mortgage Banking-Republic Bank
“You will find interest rates hovering around the 12s, 13s, 14s. Three years ago, you could borrow at as high as 27%. Currently, we are in the teens.Now, my comfort is if these current rates can be sustainable.If they are sustainable and they can even further be driven downwards, you have a lot more low-income earners falling into the brackets to be able to borrow. You see, mortgages are a factor of your income, your age, and also your credit rating. Once interest rate comes down, which is the key factor in the determinant, you have a lot more people joining the backlog.” Dan stated
On the exchange rate and its effects on mortgages, Dan Adjetey advised potential mortgagees to not take mortgages in dollars or any other foreign currency if they earn in cedis.
“We advice that, to anybody who wants to take a mortgage from us, if you want a USD facility which the exchange rate will have an impact on, then you should be earning the USD or any foreign currency so that the exchange rate does not impact you. If you earn in cedis , then take a cedi mortgage.” Dan added
Adjetey explained that this is to ensure that mortgagees are shielded against exchange rate volatilities which might end up making them pay more in terms of monthly installments.
“Because you see, if you earn cedis and you take a USD mortgage, aside the fact that you’ll be paying more, you still have the exchange fluctuations affecting you.” he added.
Ghana’s mortgage industry is an emerging but heavily constrained market. Mortgages account for only about 1% of the country’s GDP due to macroeconomic instability, short loan tenures, and high-interest rates ranging from 15% to over 30%. Despite the challenges, Dan Adjetey expressed optimism about the trajectory of Ghana’s mortgage industry, projecting significant improvement within the next five to six years.
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