Government sets aside ˘30 billion for housing project

Government has set aside 30˘ billion out of its investment in HFC inflation index linked bonds as seed money for the affordable housing project.

This follows government's intention to promote homeownership as part of measures to address the housing problems experienced by workers especially public sector employees.
The Minister of State at the Ministry of Finance and Economic Planning, Dr. Akoto Osei made this known in Accra on Thursday at the Inaugural Meeting of Management Trustees of HFC Bank and the Public Sector Home Ownership Scheme.
He said, under the affordable housing project, HFC Bank will offer two products, namely the Home Purchase Mortgage and the Buy Build and Own A Home. According to him, the maximum loan for the Home Purchase Mortgage is ˘250 million with a maximum term of twenty years. The Minister further noted that employees can benefit from the Buy Build and Own A Home project with a maximum loan (to buy land) of ˘50 million with a maximum term of 5 years. The maximum loan (to build) and the maximum term are ˘200 million and ten years.
Dr. Akoto Osei disclosed that "The source of funding for the affordable housing scheme is the HFC inflation index linked bonds being held by government which amounts to ˘69.2 billion (US$ 7.5 million). In this scheme, government is setting aside ˘ 30 billion of the income accrued from these bonds which will provide seed money to HFC Bank to be disbursed as mortgages to public servants. All proceeds from the fund go back into the fund excluding management fees".
"Affordability has been well addressed in the scheme. For a monthly income of only ˘2 million, public servants can contribute a minimum of25% of their income to own a two¬bedroom house with mortgage financing at an interest rate capped at 15% as against HFC normal interest rate of 22%", he added.
The prices quoted for prototype house are pegged around ˘1l5,822 million for a two¬bedroom semi detached house and a three-bedroom semi detached house goes for ˘249,532 million.
Explaining further the project operating modalities, Dr. Akoto Osei said HFC will use selected established estates developers to deliver the proposed mortgage housing products. He however bemoaned that there is scarcity of finance for housing developers which will hinder the rate of delivery of houses. To ensure sustainability of the project, the Minister of State said pre-financing will be provided for customers whose mortgage applications have been approved, adding that the funds will be disbursed to the developers until the property is complete.
Dr. Akoto Osei emphasised that, the proposed interest rate for the scheme will be based on the preceding three month moving average of the 91-day T-bill rate plus a margin of 1, capped at 15% annually, stressing that a floor rate of 10 % will be introduced in order to accommodate the interest rate capof15%.
Funding of the scheme, according to Dr. Osei will be guided by an investment policy with the primary objective of providing for consistent long term growth of the principal and sustainable funding for the housing scheme.
Members of the Board of Trustees are Rev. Father Samuel Victor Dodoo (Ministry of Local Government), Mr. Gyarteng, Chief Director at the Ministry of Water Resources, Mr. Asare Akuffo from the HFC Bank and Mr. Sarfo Kwakye and Nana Sireboe both from the Ministry of Finance and Economic Planning.

Source: Investor