Abstract:
It is onerous for low- and middle-income earners in most developing economies to satisfy the five (5) Cs lending
criteria: character, capacity, capital, collateral and conditions. Consequently, about 80% - 90% of Ghanaians
cannot afford a mortgage to purchase the cheapest developer-built unit. Key to the affordability problem is
inadequate sources of long-term funds and the high cost of the available formal housing financing sources; i.e.
mortgage. The concept of pension housing financing in South Africa provides evidence as a potential innovative
solution to the above challenges in Ghana. Hence, through a review of extant literature based on axiological
philosophy argues for the similar use of pension assets for ‘direct’ mortgage and micro housing financing in
Ghana. In theory, pension loans and pension-secured loans could provide a better asset-liability matching for
housing financing based on the Preferred Habitats Hypothesis; a potential solution to the long-term scarcity of
mortgage funds, maturity gap problem and liquidity risk, which currently accounts partly for the substantial risk
premiums on mortgage loans. Thus, eighty-five (85%) of SSNIT members have about 25-30 years to retirement.
The paper starts a debate for the implementation of section 103 (2) of the National Pensions Act of Ghana, 2008
(Act 776), which provides the legal impetus for the collateralization of pension benefits as security in
replacement of the adverse traditional brick and mortar collateral regime in accessing mortgage finance. Future
studies could identify ways by which section 103 (2) could be implemented. Prior to that, testing the proposed
hypotheses is vital.
