Ethiopia's Sole Mortgage Lender Halts New Loans as National Housing Fund Takes Shape
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Goh Betoch Bank, Ethiopia's only specialised mortgage lender, has paused new long-term mortgages after its loan-to-deposit ratio climbed to 160 percent, even as the central bank moves to set up a National Housing Fund and a 100 billion birr refinancing company.
Goh Betoch Bank, Ethiopia's sole specialised mortgage lender, has been forced to pull the brake on long-term mortgage lending after its loan-to-deposit ratio soared to an unsustainable level, highlighting severe structural liquidity mismatches in the financial sector just as federal authorities and policy researchers move to establish a National Housing Fund and a 100 billion birr mortgage refinancing company.
Speaking at a housing finance panel during the Ethiopian Finance Forum 2026, GohBetoch Bank chief executive Girum Tsegaye said the bank's loan-to-deposit ratio rose far beyond standard commercial banking thresholds. Goh's LDR surged to 160 percent; public financial statements for the fiscal year ended June 30, 2025, showed 1.32 billion birr in deposits against 1.67 billion birr in outstanding loans, and subsequent liquidity constraints forced a complete operational pause on new mortgages. Conventional commercial banks typically operate at an LDR below 90 percent.
Girum explained that the bank's initial business model faltered after key funding assumptions failed to materialise over the past four years. It had anticipated accessing domestic pension funds and concessional long-term financing from institutions such as the World Bank and the International Finance Corporation, but neither avenue yielded capital. In the absence of a dedicated mortgage banking licensing framework, the bank deployed its own equity to issue long-term housing loans rather than expanding its branch network to mobilise retail deposits.
Aderajew Shumete, a senior adviser at the National Bank of Ethiopia, described the domestic mortgage market as shallow and exclusionary, noting that housing finance has accounted for less than five percent of total bank lending over the past five years while total mortgage debt sits below 0.5 percent of gross domestic product. Prevailing mortgage interest rates near 18 percent, combined with strict down-payment rules and a lack of flexible, Sharia-compliant or incremental housing products, have locked out most urban households.
The central bank is finalising a specialised mortgage-financing directive built around two new institutions. The first is a National Mortgage Refinancing Company, structured as a wholesale liquidity facility under central bank leadership with advisory support from the International Finance Corporation, which has committed at least 200 million dollars toward the planned 100 billion birr capital base. It will purchase qualifying mortgage portfolios from commercial banks under an indicative 60 percent private and 40 percent public ownership structure.
The second pillar is a public National Housing Fund operated under the Ministry of Finance to address affordability rather than direct construction, mobilising voluntary housing savings, government seed capital and thematic housing bonds to offer down-payment assistance, interest-rate subsidies and partial credit guarantees. The blueprints build on Policy Studies Institute and Addis Ababa University research that put the annual urban housing deficit at roughly 471,000 units and found that 64 percent of the urban population lives in informal settlements.