As part of the government's efforts to solidify the linkage between real estate, the housing sector, and economic recovery, a policy proposal aimed at developing both the primary and secondary mortgage markets will be implemented next year.
The Minister for Finance, Ken Ofori-Atta, who disclosed the policy in the presentation of the 2022 budget to parliament last week, said the policy is an indication of the government’s quest to prioritise the real estate and housing sectors for strategic support in 2022.
The proposed plan will include collaborations with participating financial institutions (PFIs) to develop a national mortgage demand database that will register and pre-screen first-time homeowners for mortgages and residential rental schemes with these financial institutions.
In addition to that, Special Purpose Vehicles (SPVs), including mortgage-backed securities (MBS), will be set up to raise long-term credits to refinance the existing mortgages in order for more to be originated.
"Mr. Speaker, in 2022, the government will accelerate the implementation of this strategy by focusing on these key components."
A blended finance concept to lower mortgage lending and rental rates to end consumers, while protecting the gains to PFIs and investors without distorting the market;
Development of a national demand database that registers and pre-screens first-time homeowners for mortgages and residential rental schemes with PFIs; and
Setting up a Special Purpose Vehicle (SPV) with banks The SPV will raise long term funds from pension funds and other long-term investment assets to support the PFIs and provide refinancing mechanisms to buy mortgages from the PFIs or package the loans into mortgage-backed securities (MBS) that will be sold to investors."
This, he said, will make the secondary mortgage market more liquid, thereby lowering mortgage lending rates for homeowners and other potential mortgage borrowers.
This plan is in line with the Securities and Exchange Commission Ghana's newly launched Master Plan that aims to promote the issuance of new securities including MBS, REITs, and Collective Investment Schemes among others in the next five years.
The Minister added that the government has already commenced engagements with the participating financial institutions (PFIs) to promote residential rent-to-own schemes and to support the development of a private sector mortgage refinancing institution.
Source: Mohammed Bomanso Issah (Real Estate Times Africa)