It’s not only about the money; Why Ghanaians Avoid Mortgages

Housing is expensive and the most tasking singular expense many households ever bear. As such, most people who are unable to afford outright purchase resort to any of the following – mortgages, incremental housing, housing associations, informal loans and crowdfunding.  

For the average Ghanaian, mortgages represent an alternative that is far too expensive and impractical, considering the down payments and high interest rate. However, there are also several socio-economic biases that motivate Ghanaians to avoid them:

  • Social stigma towards debt

Many Ghanaians have some level of apprehension towards the use of debt, particularly for an undertaking as significant as constructing one’s home. In contemporary times, most people determine their personal worth by their financial standing, and being in debt is seen as the very opposite of financial worth. This view is shared by well over 60% of individuals interviewed, and represents the most significant reason beyond the high interest rates. This bias seems to be a bigger issue for men than it is for women, with 26% more men stating this reason. This aversion towards debt particularly by the males may be attributable to the trite sentiment that ‘the man provides’.

  • Fear of losing one’s home to foreclosure

Possibly influenced by the large number of foreclosures in the aftermath of the financial crisis in 2007, the fear of foreclosures has been etched in the psyche of many homeowners. About 57% of respondents highlighted a fear of foreclosures, regardless of the fact that the banks insist they have not completed any such measures between 2013 and 2017. 

  • Distrust of financial institutions

Particularly in developing economies such as Ghana, there exists mutual suspicion between people and the financial institutions. This is as a result of common belief that the banks ‘are out to get them’, and this belief discourages a number of prospective home owners from exploring mortgages as a financing option. Just shy of 1 in 2 people consider this reason significant, a distrust that seems more pronounced with higher amounts of money. 


Albert is a graduate of MSc. Real Estate Finance
from the Henley Business School, University of
Reading with experience in the areas of academic
research and teaching.
His research interests are in the areas of behavioral economics, mortgages, commercial real estate and alternative housing finance with a focus on developing countries and emerging markets.

Published by Saasepedia

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