Monday, February 3, 2014

Interest Rates on Mortgage Loan in Ghana and Its Impact on The Average Ghanaian

 Interest Rates on Mortgage Loan in Ghana

If acquiring mortgage loan is a challenging and an exasperating option for many average Ghanaians, the interest rates that come with it is proven to be a catastrophic burden to all. In Ghana, many people have decried the rates at which interests are being charged by financial institutions and mortgage brokers, describing them as outrageous!

There are many local financial institutions, which deal in mortgage loans. These financial institutions include; Ghana Home Loans; Home Finance Company (HFC); Barclays Bank; Eco Bank, and United Bank of Africa (UBA).With a total global capital of around 70 million dollars, and contrary to other international banks, Ghanaian mortgage brokers do not have the sufficient financial capacity to cater for customers’ loan needs. In general, they will offer loan ranging from GH ¢24,315,700.00 ($10,000) to GH ¢243,157,000.00 ($100,000), only; and that comes with untenable high lending rates.

The interest rates as charged by these financial institutions are between 25%-40% on a mortgage loan, making Ghana the country with the highest interest rates in Africa, and the second highest in the whole wide world. This simple scenario reflects very well the ‘absurd nature’ of Ghana’s mortgage interest rate charges. For instance, should one borrow an amount of GH ¢100,000.00 ($40,588.6) for a 10-year period, by the close of the first year only, the borrower is indebted to the bank to the tune of GH ¢140,000.00 ($56,823.95). Meaning, by the end of the 10-year period, the borrower would have paid the bank more than 400% of the original amount on loan; meanwhile, the property they bought or built would not have its value increased that much. In fact, financial institutions are the ones who are making unacceptable exorbitant profits at the expense of the average Ghanaian.

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Against all the fiercest criticisms, banks and other mortgage brokers continue with their recurrent activities, justifying the interest rates that they have been infringing on their customers. Banks argue that they have to deal with the cost they incur in terms of the hazardous nature of the loans they give out to customers. Meanwhile, researches have shown that these mortgage brokers refuse to do due diligence and rather blame their customers –predominantly in the informal sector – to be too secretive about their businesses, inefficient, unrealistic in their plans, and volatile.
Whichever the excuses, it is evident that these high interest rates pose a threat to the economy of the country. It stifles the free flow of both the government, corporate, and individual’s dealings – rendering the whole economy helpless and making Ghana an expensive country to live in.
  1. Mortgage in Ghana is Too expensive - There is no shred of doubt that these gargantuan interest rates are too expensive in the eyes of Ghanaians and most people cannot afford it, except a handful of those who “have made it” in life. The average Ghanaian earn a little over GH ¢3,500 ($1,420) annually, and so it is very obvious that he cannot think of acquiring a mortgage loan. Already, there would be a tall list of necessities he needs to be provide for the family including paying of school fees, payment of utility bills and the rest. Therefore, how much can he afford to deduct from this money to pay for a loan with such huge interest?
  2. Inaccessible Mortgage in Ghana - The fact that one’s source of income and the income itself is a determining factor in acquiring a mortgage loan automatically disqualifies the average Ghanaian who earns just a little over GH ¢300.00 ($121) as salary from obtaining a mortgage loan. This means, he can never live in his dream house because he would not be able to build or buy a house of his own house since he cannot borrow for that purpose.
  3. Ghana Mortgage Interest Rates Hardships - High interest rates brings hardship, making living very difficult in Ghana. The pressure of owing a financial institution such a huge sum alone is frustrating. And what happens if the borrower loses his job later? This will amount to foreclosure – where the property would be retrieved from the borrower when he is not able to pay his loan at the given time. This means, he has actually suffered to loose – in terms of having sacrificed so much money to acquire a property, which was never recovered.
Ghana’s high mortgage interest rates remain a contentious issue, stirring hitting debate between Government and the Bank of Ghana.

While others have blamed the government for not doing enough to control mortgage interest rates, substantially; some members of parliament have cautioned Government and the Bank of Ghana about disastrous consequences, should these two entities fail to engage in a workable resolution to this long-term controversial exorbitant mortgage interest rate. Just as the Minister in Charge of Financial and Allied Institutions rightfully put it during a debate on the country’s Treasury bill:

“The issue of high lending rates to customers must be a major concern to many people, and until it addresses economy, it will not make any headway but keep going round in circles.”


  1. Wonderful story. These high rates and unreasonable business practices brought the financial and real estate markets to their knees in the US and Europe; predatory lending practices. Government regulation of, not government negotiation with, the Banks is the only solution; just like Obama's Wall Street Regulations which the Republicans are still fighting. Go John Mahama, learn from your friend Obama, take the necessary steps, evolve strict lending guidelines for interest rates and fight the Banks to achieve some comfort for Ghanaians. I was just at the ADB website a few minutes ago and I saw what shocked the hell out of me. The site lists their lending rates for Agricultural loans as "prime + 4%". Folks, it also lists prime as 25%. So, for an agricultural loan, which has the lowest rate, the interest rate is 29%. Folks, was I reading right or it was a figment of my imagination? How can Ghanaians develop and invest in Ghana with such rates; at least the common man making less that 3,000 GHS per year? John Mahama, you have your work cut out for you. Please do something NOW or else no one will; at least not the Banks and lending institutions.

  2. Hi how can I get the plan for the house in the picture please.. I really like it... plz contact me

  3. Hi, Get more details on the House Plan on here-->


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