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Rising NPLS: Real estate players share causes antidotes 

Adnan Adams Mohammed

Players in the real estate sector has shared their concerns leading to the rising Non-Performing Loans (NPLs) in the construction sector attributing the phenomenon to the lack of attractive mortgages in the country.

Bank of Ghana recent data has revealed that, a total of GHC2.086 billion was written off as bad debt by banks operating in Ghana. Of this, the construction sector performed worst, with NPLs for the sector increasing by 13.6 percentage points to 35 percent during the review period.

The inability to pay back loans by borrowers within the period of review was attributed with COVID-19. The NPL ratio in the banking sector increasing from 15.5 percent in August 2020 to 17.3 percent in August 2021. This was disclosed by the central bank’s Domestic Money Bank’s Income Statement.

“When we build the houses, we use loans and other types of finances. We invest in acquiring land banks, and yet we can’t sell the houses, and this is what causes the issue of unpaid loans in our sector”, Patrick Ebo Bonful, President of the Ghana Real Estate Developers’ Association (GREDA) shared. “So the issue has to do with the lack of a mortgage, a mortgage that can serve the purpose. The tenures of the mortgages given here in this country are too short.”

“We are hoping to get mortgages with tenures as high as 15 years, 20 years, and 25 years. When the tenures are long, it means the monthly payments will be bearable and affordable for most people. So we need to have a serious conversation on the way forward with mortgages once and for all,” he added.

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