Author: Nayeram
Abstract
Purpose: Mortgage financing plays a pivotal role in solving the acute housing problems faced by the populace in developing countries. The question often posed is how can the average Ghanaian own a home given his meager income? This study seeks to investigate the operations of mortgage financing firms in Ghana, and how these institutions make loans available to the populace who want to own homes, but cannot do so due to financial constraints. Design/Methodology: Data for the study were obtained from Ghana Home Loans via questionnaire and structured interview. Respondent for the questionnaire constituted clients who had benefited from services provided by Ghana Home Loans Company. The structured interview was administered on the CEO of the company. Findings: Mortgage loans in Ghana are often extended to individuals who have the capacity to contract other than corporate entities. Though the repayment of mortgage loans follow an amortization schedule, clients perceived interest rate charged on loans as outrageous. Though the mortgage industry presents a number of opportunities that could be harnessed, inadequate supply of houses by estate developers continue to be a major challenge confronting the industry. Practical implications: The findings of the study present a number of opportunities for mortgage firms to revise their brick-and-mortar lending practices, and engage in more proactive operations. Given that the interest rate on mortgage loans is tied to the exchange rate and the interest rate in foreign countries where most financial institutions in Ghana obtain their funding, firms should take a proactive stance and invest in derivative securities in order to cushion themselves whenever exchange rates rise.
Paper Type: Dissertation
Key words: Mortgage, Ghana
