As we move into the holiday season, many home buyers are looking ahead to 2019. And many of them share the same questions: What will be the outlook of mortgage in 2019? Will it be a good time to buy or refinance a home? Here are some trends that could shape 2019.
1.A rejuvenated Management Team at Federal Mortgage Bank of Nigeria
The pro activeness of the new team at the FMBN,will have a positive effect on the mortgage industry,most especially with the launching of the FMBN Mobile App, which will bring subscribers closer to the Apex mortgage bank.The strategy of the bank,in working with cooperatives and labour unions is another rare that stakeholders are awaiting a positive impact.
The Bank’s current business model targets partnerships with local and international organisations with financial and technical capacity, interested in delivering affordable mass housing for the low income end of the market.
2.Entrance of Family Homes Funds
Family Homes Funds, an initiative of the Federal Government, is aimed facilitating affordable housing delivery by entering into specific partnerships with supportive State Governments, developers and International partners/agencies that can provide technical support and financing for project implementation.The is promoting widespread home ownership by providing affordable housing to be paid for through a sustainable mortgage financing system. Family Homes Funds will deliver discounted mortgages for home owners and also give housing developers access to attractive funding options.
3.Recent restructuring at NMRC
The NMRC is a critical aspect of really getting the mortgage to work in Nigeria. Their role as a secondary mortgage institution is to provide the liquidity that is needed by going to the capital market and raising funds, and making those funds available to member banks for the refinancing of their mortgage portfolio.
So when that is done, what NMRC then provide is not just that liquidity; extending the tenure of the mortgages brings affordability closer to people. It also provides accessibility to mortgages and when all of those things fall together, there will be a stable housing market. Major stakeholders are awaiting positive development from the recent restructuring at the NMRC Board.
4.Maximum Mortgage Loan for Home Seekers
Barely 2 months ago, the Central Bank of Nigeria (CBN) pegged the maximum mortgage loan for home seekers at N50 million. This maximum mortgage loan is directed at home seekers in the informal sector, which is under the Nigerian Housing Finance Programme (NHFP).
Details of this are contained in the guideline for the uniform underwriting standards for the informal sector, which was released by the CBN earlier this year. It spells out formalities for mortgage banks to offer loans to those in the self-employment space as well as employees.
If you are in the self-employment space, you are categorised under the micro, small and medium-sized enterprises. It is important to point out here that the informal sector contributes over 58 percent of the nation’s economy.
You can use the mortgage loan here to finance the purchase or refinance an existing mortgage loan. As an eligible borrower, you can also use the loan to purchase a single family home or an apartment in a multi-unit building. This is a plus for mortgage trends.
5.Nigerian Banks Looking to Drive Mortgage Loans
Banks in Nigeria have been encouraged to enlist housing cooperatives and associations into the pool of mortgage loan for home seekers. The idea behind this is to the initiative would give those without structured income access to mortgage loans for property acquisition.
The National Housing Finance Programme under the CBN will keep a close tab on the number of mortgages created in the informal sector. As a borrower, you will receive homebuyer counselling prior to closing on your loans.
Financial institutions in Nigeria are expected to come up with mortgage counselling classes to educate borrowers on their rights and obligations of homeownership as well as the legal consequences of default. This would be done just as it is carried out in other sectors of the economy and nations of the world. This is a good score for mortgage trends.
If you are wondering how a property will be valued under this scheme, licensed and independent valuers who are members of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) will be pre-qualified by the 34 licensed mortgage banks to value property to be listed in the scheme.
6.The Role of Mortgage Banks
Mortgage banks in Nigeria will market the benefits of mortgage loans to eligible borrowers. They will also learn from the microfinance banks that have a wealth of experience working with the informal sector of the economy. This is healthy and interesting for mortgage trends in the country.
The end goal here is to provide mortgage loans to Nigerians .The CBN launched the NHFP in 2017 with the aim of increasing access to housing finance and home ownership for Nigerians.
7.Channeling Pension Funds Into Mortgage Assets
The year 2018 has been rife with calls from the Mortgage Bankers’ Association of Nigeria to the National Pension Commission (PenCom) and the Central Bank of Nigeria on the need to invest part of the N7.5 trillion pension funds in mortgaging. This scores well for mortgage trends.
Such an investment, according to the Mortgage Bankers’ Association of Nigeria is expected to allow home seekers entry into a mortgage with a single digit interest rate.
The MBAN has made it clear that the there is access to such funds in other countries. This makes it easy and explains why people there have mortgage loans with single digits.
According to MBAN, the goal is to encourage home ownership and reduce housing deficit across the country. You should also know that this move is different from the stipulated 25 percent pension Retirement Savings Accounts (RSA) for mortgage loans.
Final Thoughts on Mortgage Trends
Mortgage loans and refinancing will thrive in an enabling environment that is rich with positive economic indices. As expected, the mortgage industry comes with a mixed kettle of opportunities and risks but Nigerians can expect the delivery of more affordable homes. These houses will be delivered through a persistent effort into looking at activities around primary mortgage origination as well as secondary mortgage refinancing.
Affa Dickson Acho
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