We must address NPLs in construction sector to enhance attractive mortgages – GREDA

NPLs push affect mortgage tenures

Ghana’s housing deficit at around 2 million units

Unpaid loans affecting mortgage structures

The Ghana Real Estate Developers Association (GREDA) has said the lack of attractive mortgages in the country is to blame for the increasing Non-Performing Loans (NPLs).

According to the President of the Association, Patrick Ebo Bonful, stakeholders must come together and find the solution to address the short tenures of mortgages given out in the country.

In an interaction with Citi Business News, the GREDA president said, “When we build the houses, we use loans and other types of finances. We invest in acquiring land banks, and yet we can’t sell the houses, and this is what causes the issue of unpaid loans in our sector. So, the issue has to do with the lack of a mortgage, a mortgage that can serve the purpose. The tenures of the mortgages given here in this country are too short.”

“We are hoping to get mortgages with tenures as high as 15 years, 20 years, and 25 years. When the tenures are long, it means the monthly payments will be bearable and affordable for most people. So, we need to have a serious conversation on the way forward with mortgages once and for all,” he is quoted by Citi Business News.

Meanwhile, figures released by the central bank showed that as a result of the coronavirus pandemic, repayment challenges were rampant in the banking sector resulting in the NPL ratio increasing from 15.5 percent in August 2020 to 17.3 percent in August 2021.

On the sectoral front, the Bank of Ghana report showed that the construction sector was the worst performed one with an NPL ratio increasing by 13.6 percentage points to 35 percent during the period under review.