Government needs to draft a policy that will assist in home acquisition through mortgages as part of measures to solve the rising housing deficit, mortgage expert Andrews Agblobi has said.

The high cost of housing and expensive lending rates have raised the cost of mortgages and priced out most workers who desire to acquire their own home, he said in an interview with the B&FT.

The effect is that more and more people are compelled to live in rented housing, where they are subjected to landlords demanding upfront rent for between two to four years.

Mr. Agblobi, author of Mortgage[s]: Lending Made Simple for Homebuyers, said government can facilitate home acquisition by giving cheap funds to mortgage providers for on-lending to home-buyers at low rates -- thereby helping more people to access financing for their homes.

He said government needs to extend to the private sector the same policy that assists public sector workers to access mortgages at very low rates.

The Public Sector Employees Affordable Housing Scheme managed by HFC Bank, which offers mortgages to government workers at below-market interest rates, can be expanded or replicated in the private sector, he suggested.

“With such a scheme, government can set a ceiling on the amount that can be lent to an individual. So if you set that amount at, say, GH¢50,000, it will force a lot of real-estate companies to build houses worth that amount since that’s where the market is,” he said.

Under government-sponsored schemes, rather than the current requirement of 20 percent down-payment for mortgage lending facilities, government can stipulate that the ratio be reduced to make it more affordable for buyers, he added.

There are 28 mortgage lenders in the market, 27 of which are commercial banks issuing mortgages as part of their loan portfolios. The lenders typically require the buyer to contribute between 15-25 percent of the value of the house, while the remainder is loaned at close to 30 percent interest per annum currently, if the loan is in cedis.

In the absence of government intervention, Mr. Aglobi warned that the current mortgage market, which is supposed to provide a more flexible option for home-buying, will remain stymied by high interest rates and the falling cedi -- which has hit the pockets of homebuyers who have borrowed in dollars to acquire their homes.

Homeowners servicing their dollar mortgages in cedis are reeling from the rapid decline of the local currency -- by around 27 percent since the start of the year -- which has been boosting their monthly repayments to levels that leave barely enough disposable income for them to survive on.

Mr. Agblobi cautioned first-time homebuyers of the risk of making a bad purchasing decision if they don’t seek advice.

“It is advisable for a first-time buyer to do his homework; that is, visit many lenders and compare the rates they each charge as well as the property the buyer wants to have, the location, and whether it meets his preference.

“The second thing the buyer should do is know if the property is affordable, since mortgages are long-term commitments and you can’t just get a place and abandon it. You should make sure it’s somewhere you want to live for the rest of your life.”