Mortgage Interest Rates in Ghana (that save you money)
Mortgage interest rates in Ghana are costly. This common knowledge. But by how much? Like many prospective homebuyers and anyone interested in home loans in Ghana information on mortgage rates is crucial for decision-making. The challenge, however, is that most Ghanaian banks do not publish data on interest and mortgage rates in particular. This situation makes it a pain to find the cost of home finance without directly contacting banks. This blogpost puts together the scattered available information on mortgage interest rates in Ghana.
What is the average mortgage interest rate in Ghana?
As of 2020, the average interest rates on mortgages in Ghana was 23%. For 2019, data from the Bank of Ghana show that the annual percentage rate (APR) on mortgages ranged from 18.7% to 31.7%. APR is a broader and more effective measure of the cost of borrowing than interest rates. More on annual percentage rates below.
Annual Percentage Rates on mortgages
When you borrow money, or more specifically take a mortgage, you’ll pay interest on the money borrowed. This interest is expressed as a percentage of the total amount borrowed (principal). However, there are other fees and payments you make in acquiring the loan. These include taking insurance, processing or application fees, brokerage fees among others. These fees/charges may be one-off payments. The APR consists of all these additional charges in addition to the interest rates.
Since APRs include other charges/fees incurred by the mortgagor (borrower), they are always higher than interest rates for the same loan. Thus, APRs also provide a better measure of the cost of borrowing and for comparing loans across different mortgagees (institutions offering the mortgage).
The interest rate is what is often advertised by banks and are also known as the nominal interest rate.
See this blog for more on annual percentage rates and how they’re more helpful in determining the actual cost of home loans.
The Bank of Ghana publishes APR banks charge on loans to promote transparency in the credit market.
USD vs Ghana Cedi mortgage interest rates
GHL/First National Bank offers USD-denominated, British Pound-denominated and Ghana Cedi-denominated mortgage loans. Mortgages denominated in foreign currency are repayable in that currency or cedi equivalents.
Foreign currency-denominated mortgages also tend to have lower interest rates but worth careful consideration due to foreign currency flux against the Ghana Cedi. Generally, US-denominated mortgages in Ghana have interest rates averaging 11%-12.5%.
Republic Bank also offers US-denominated mortgage loans and reports interest rates of 11%-12% per annum.
Mortgage interest rates from major Ghanaian banks
The dominant banks offering mortgage products in the country are Cal Bank, Fidelity Bank, First National Bank (Ghana Loans is now part of this bank), Republic Bank (erstwhile HFC bank), and Stanbic Bank. Ghana Commercial Bank recently announced that they were part of the National Mortgage Scheme for Public Servants.
1. Cal bank
Cal bank offers home purchase and home purchase mortgages.
Interest on mortgages is not stated on its website. In 2018, however, Cal bank mortgages had an APR of 31.1%, according to the Bank of Ghana. While this data is dated, significant declines in the APR is not expected. The Bank of Ghana has yet to be publicly made available current rates.
2. First National Bank/Ghana Home Loans
Ghana Home Loans/First National Bank offers several mortgage products, including; home construction/completion mortgage, 100% purchase mortgage, land purchase mortgage, equity-release and home improvement mortgage and save-to-own mortgage. The mortgage rates differ for the different mortgage products. For example, USD mortgages average 10-12%. First National Bank provides the some of the most diverse and customisable home loans in the Ghana. Mortgages can be tailed to individual situations. While GHL mortgage but there are other cost items to be aware of. See here for more details on costs/fees on their mortgages
- home loans application fee – 2.5% of the loan amount
- deposit toward registration of title/home loan – 2% of property value
See this for more on hidden costs on home loans in Ghana
3. Stanbic bank
Stanbic Bank’s mortgage products include; Home Purchase, Equity Release, Home Improvement, Employer Group Mortgage Scheme, and Developer Construction. The annual percentage rate on mortgages in 2019 was 22.8%, a reduction from 24.7% in 2018.
Stanbic also offers the Public Servants’ Housing Loan Scheme priced at 12 per cent per annum. As a public servant in Ghana, these are some of the lowest rates. To qualify, a minimum net monthly income of GHS1,800.00 is required either as an individual or couple.
4. Fidelity bank
Just like the other banks, Fidelity offers a range of mortgage products. Home finance, home equity, home completion, home improvement and serviced plot finance. The diversity of products is similar to those offered by other banks, which makes the cost of borrowing a critical decision making. APR on cedi mortgages was 30.5% in 2019.
5. Republic Bank
Republic Bank (formally Home Finance Company Bank – HFC bank) has a long track of providing mortgages in the country. It holds about 30% of total mortgage market share.
The standard home loan rate is 24% per annum. Relative to the APR in 2019 of 28.6%, one should expect additional transactional costs aside from the 24% interest rate. Other costs are; processing fee – 1.5% facility fee – 1%.
Republic Bank also offers a Public Servants’ Housing Loan Scheme from the Government of Ghana. As the name indicates, it is only accessible to employees of government agencies. This mortgage product has an interest rate of 11.9% and the loan duration is 20 years max.
See for their mortgage calculator
6. Prudential Bank
Home loans by Prudential bank have interest rates of 24.5%-26.0% per annum. APR was 31.3% in 2019.
Conclusion
For USD mortgages expect interest rates of 11%-12.5%. Ghana Cedi home loan rates typically range from 24%-31% per annum. APR of home loans is slightly higher since they include other transactional costs/fees and charges.
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Resources mentioned in this post
- Bank of Ghana
https://www.bog.gov.gh/wp-content/uploads/2019/12/APR-of-Banks_October_2019.pdf
2. Centre for Affordable Housing Finance
https://housingfinanceafrica.org/countries/ghana/
3. Ghana Home Loan Fees and Charges
https://www.firstnationalbank.com.gh/downloads/Ghana/FNBGH_HomeLoans_Pricing_Guide.pdf
This information does not constitute financial advice. As always speak to your bank or financial advisor.
