An Emerging Mortgage Market In Africa: The Case Of Ghana

Development of mortgage markets is essential for African countries not only for the housing needs of the high population growth but also to potentially address high unemployment rate in the continent. Mortgage data in Africa, specifically across sub-Saharan countries are scant and, in some instances, non-existent. This paper examines data on mortgage loan originations in Ghana. We examine 1,476 mortgage transactions in the country by a single loan provider from 2008 to 2016. Our preliminary results show that the average loan originated for the period is US$66,993 with an average loan to value ratio of 49% between 2013 and 2016. The national capital – Accra, which also doubles as the Greater Accra regional capital accounts for 72% of loan originations. We find that there is a positive significant relationship with the loan origination and number of bedrooms and if a property is located in Accra. The results, however show a negative significant relationship between loan and detached properties in Accra. We further examine what property characteristics determine a higher loan to value ratio using a probit model. Our preliminary findings show a positive significant relationship between a higher loan to value ratio and the number of bedrooms and if the property is detached. The results so far, also yield a positive but insignificant relationship between properties in Accra and loan to value ratios. The initial findings give rare insights to an emerging mortgage market in Africa, which otherwise is considered as opaque.