Almost all adults aspire to own their own house. After all, according to Abraham Maslow’s hierarchy of needs, having a roof over one’s head is a basic need. Nobody wants to give their life away to a landlord by making rent payments.
Unfortunately, it can be very challenging to own a home anywhere in Africa. And there are a number of reasons why, including the fact that the African mortgage market isn’t really accessible or dependable enough to help those in need. The issue of high mortgage interest rates is another one.
It is not surprising that many Africans prefer to construct their own homes from scratch. Sadly, because it would be so expensive to do so, the process would frequently take years. Housing Market Dynamics in Africa, an open access book published in 2018 with the authors El-hadj M. Bah, Issa Faye and Zekebweliwai F. Geh detailed the construction cost conundrum in Africa, writing:
“The financing of housing development, like many other development issues faced by African countries, is quite challenging. This is mainly due to the lack of adequate conditions or resources to facilitate such financing. The housing finance market in Africa is exposed to a number of risks.”
One of the main reasons for the continent’s housing shortages is the inefficiency of the housing finance market. Now, there are two questions a lot of Africans (especially young adults) ask themselves are:
1. Why is the African mortgage market so difficult to access for those who need it?
2. Why are mortgage interest rates in African nations generally higher than in other parts of the world?
Maybe only African banks, regulators, and legislators have the answers to these questions.
What is an interest rate on a mortgage?
According to The Balance, “a mortgage interest rate is a percentage of your total loan balance that’s paid on a monthly basis until your mortgage loan is paid off, along with your principal payment. It’s a component in determining the annual cost to borrow money from a lender to purchase a home or other property.”
Note that the interest rates on mortgages in some African nations are among the highest in the world . For instance, the interest rate on mortgages in Zimbabwe can reach 50%. Despite this, there are still some nations with mortgage interest rates that are relatively low. We now highlight 15 such countries, courtesy of stats obtained from Statista.
- Libya: Has a mortgage interest rate of 5%.
- Burkina Faso: Has a mortgage interest rate of 7%.
- Morocco: Has a mortgage interest rate of 7%.
- Algeria: Has a mortgage interest rate of 7%.
- Djibouti: Has a mortgage interest rate of 7%.
- Egypt: Has a mortgage interest rate of 7%.
- Togo: Has a mortgage interest rate of 8%.
- Eswatini: Has a mortgage interest rate of 8%.
- Niger: Has a mortgage interest rate of 8%.
- Equatorial Guinea: Has a mortgage interest rate of 8%.
- Benin: Has a mortgage interest rate of 8%.
- Senegal: Has a mortgage interest rate of 8%.
- Sao Tome & Principe: Has a mortgage interest rate of 8%.
- Lesotho: Has a mortgage interest rate of 9%.
- Carbo Verde: Has a mortgage interest rate of 9%.
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