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NMRC:Bridging The Housing Deficit Gap Through Mortgage Refinancing

The Nigerian Mortgage Refinance Company (NMRC),was set up to bridge the funding gap of residential mortgages and promote availability and affordability of good housing to working Nigerians, and  to provide mortgage lending banks with increased access to liquidity and longer term funds in the mortgage market. Incorporated on 24th of June, 2013, the company is an integral part of the country’s financial system, with special focus on housing finance and, or the mortgage system.

NMRC is driven by substantial private sector participation consisting of commercial banks, primary mortgage banks, insurance companies, private equity investors, and implemented as a component of the Nigeria Housing Finance Programme, an initiative of the Federal Ministry of Finance in collaboration with the Central Bank of Nigeria (CBN), the Federal Ministry of Power, Works and Housing, and the World Bank/International Finance Corporation (IFC).

The company has the mandate to resolve access to affordable housing finance and, more importantly, as a focal point for creating an enabling environment for housing finance by playing a strong developmental role in supporting the improvement of land, legal framework,  housing development and construction.

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Thus, it is the hope for low-income earners, who cannot afford the cost of a mortgage loan. The introduction of NMRC has reduced the cost of mortgage loan by improving market efficiency, lowering cost of funds and allowing for longer repayment tenor period by financial institutions.

This initiative is for the benefit of all Nigerians in the long term, average Nigerians with sustainable and verifiable level of income can access mortgage loans easier and faster from participating mortgage lenders.

These institutions will be better equipped to provide long term loans having refinance from NMRC. It will enable developers to build homes faster and allow these homes to be purchased at an affordable cost.At inception, the World Bank approved a concessional $300 million, International Development Association (IDA) loan to facilitate the execution of the Housing Finance Programme.

About $250 million of the IDA loan will be disbursed in installments to NMRC as Tier 2 Capital based on key performance indicators–it will be retained on NMRC’s balance sheet to provide credit support for NMRC’s bond issuances.

The balance of $50 million will be allocated to other components of the Housing Finance Programme. NMRC has 18 pilot States, these include: Abia, Anambra, Bauchi, Bayelsa, Delta, Edo, Ekiti, Enugu, Gombe, Kaduna, Kano, Kwara, Lagos, Nasarawa, Ogun, Ondo and the FCT.

The Lagos State government has led the way by signing a Memorandum of Understanding (MoU) with NMRC to deliver 20,000 houses, under the State’s Lagos Affordable Public Housing (L.A.P.H.) initiative, to help bridge the housing gap in the State.

The MoU will avail residents of the State the housing affordability and accessibility that NMRC provides through the refinancing of long-term mortgages.The partnership with NMRC also includes Ibile Holdings Limited, the state’s investment company as well as some developers engaged by the state through direct and Joint Venture Initiative to deliver 20,000 housing units by the end of 2018.

At the signing of the MoU, the Lagos state Commissioner for Housing, Prince Gbolahan Lawal, revealed that the Ministry is working on various modalities to ensure accessibility of the citizenry to these housing units.

By creating an enabling environment for mortgage finance, State Governments will be able to attract NMRC to refinance mortgage loans created in these states. This will in turn improve the economy of these states by increasing employment/labour and housing production by stimulating housing construction and manufacturing of building materials in such states.

The opportunity presented by the housing market can be exploited if all Government agencies (State and Federal) and Private Sector (Financial Institutions and Construction Companies, etc.) act responsibly. What this means is that households wishing to either, develop their existing home, or acquire a home of their own, must know that they have easy and fair access to a certificate of occupancy without any doubt.

Land registries in the States must provide access to these rights at a low cost and within a few months rather within a few years, as is often the case. Mortgage Institutions have to provide transparent product offerings, with standardized documentation, so that consumers can make self-assessments and develop realistic savings plans towards financing their homes.

Construction companies, artisans, suppliers of building materials, have to start building homes of real value and not of speculative value. This means that the quality and cost of homes should be easy to assess without large costs to the borrower.

As part of its contributions to the housing sector,NMRC is also ensuring the availability of data to drive housing development and sustainable lending through the introduction of its housing information portal and mortgage market system. The systems have been developed and is in use by mortgage lending institutions to drive improved access to lending and property as an ecosystem.

SOURCE: Affa Dickson Acho

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