The Chairman of a leading property development and management company, Urban Shelter Limited, Malam Ibrahim Aliyu, has said the potential for housing in Nigeria will not be realized until the current mortgage rate is brought down below 10 per cent.
Malam Aliyu stated this during a courtesy visit on the company in Abuja recently by officials of Media Trust Limited, publishers of Daily Trust and other titles, led by its Chief Executive Officer, Malam Mannir Dan-Ali.
The Urban Shelter Limited chairman said if government borrowed less, interest rate in the country is lower and the cost to borrow to finance housing (mortgage rate) is also much lower – between 9-10 per cent – the potential for housing in the country could be realized.
“Our mortgage rate must be around or about 9 per cent and this can only come about when inflation is lower and inflation can be lower only if government is not borrowing at the kind of rate we have seen in the last 15 years,” Malam Aliyu said.
He said the development of housing was a critical factor in the development of any economy and that Nigeria has substantially lagged behind in that area primarily because the issues around finance have not been tackled.
“There’s no way you can get extensive housing finance if you do not have a good mortgage system. You cannot have a good mortgage system if you cannot borrow at an interest rate that is less than two digits: nine per cent or less.
“The main reason why such mortgage funding is not available is because government is borrowing extensively at rates of 12 per cent and up to 15 per cent. There is a need to moderate this. It will help to moderate inflation and bring the mortgage rate down which can proliferate housing development,” he added.
While commending President Muhammadu Buhari for signing the new Executive Order 007 that permits private companies to fund major road construction projects and in turn get tax credit, Aliyu urged government to further expand infrastructure financing opportunities.
“I think Mr. president is in a wonderful position to recognize that infrastructure is important. The government cannot do it alone. Government has started to recognize this. They should go further. The Executive Order 007 is an important development. The only limitation is that they have taken only one means of financing infrastructure,” he noted.