High interest rates and the lack of affordable housing to purchase are two main factors curbing the growth of mortgages in Ghana, Asare Akuffo, Managing Director of HFC Bank, has said.

The most crucial challenge, however, is the high interest rates since the problem of inadequate affordable housing can be solved if the rates come down to between 10 and 15 percent, he said.

“I think it is the high interest rates that are most crucial, because if really there is demand and people can afford the houses, we will get developers that will deliver them," he said.

He said there is a need to produce large units of housing or create townships of about 1,000 or more units before house prices can be brought to around GH¢50,000 and below for most Ghanaians.

“This can be done because other countries like Mexico and Malaysia have been able to solve the problem. All that is needed is for interest rates to come down,” Mr. Akuffo said.

“If interest rates remain above 20 percent, then it becomes a major challenge. We currently have a dollar mortgage portfolio that is growing because we can borrow the dollar at seven percent and then lend at 10 to 11 percent, showing our commitment to the mortgage business.

“But we do not want to do only dollar loans but cedi loans as well, so that Ghanaians can borrow up to GH¢30,000 to buy homes.”

The Government of Ghana (GOG) in its 2007 budget mandated HFC Bank to provide an affordable home-ownership scheme for public sector employees. The scheme - HFC Public Sector Home Scheme - has its interest rate capped at 15 percent and the volume of loans has been growing very slowly.