Stakeholders in the mortgage sub-sector have revealed plans to simplify mortgage transactions for aspiring homeowners in the country.
One of the steps, according to them, is the inauguration last year of the ‘My Own Home’ scheme, a Public-Private Partnership created to increase access to housing finance and housing in the country.
The scheme is under the Nigeria Housing Fund Programme, set up by the Federal Government and Implemented by the Central Bank of Nigeria with the support of the World Bank’s International Development Association loan.
The NHFP has broad-based stakeholders and partnerships that include the Federal Government; Federal Ministry of Finance; CBN; World Bank; Federal Ministry of Power, Works and Housing; Federal Ministry of Justice and Mortgage Banking Association of Nigeria, with mortgage originating institutions participating in the scheme through the equity stake they took in the Nigeria Mortgage Refinance Company.
The scheme entitles all Nigerians above the age of 21 and in paid employment to a low interest government-funded loan, according to the stakeholders.
At a media chat recently, the President, MBAN, one of the critical stakeholders, Mr. Niyi Akinlusi, stated that mortgage origination in the country had been very low.
According to him, only about five per cent of the 13.7 million housing units in Nigeria are financed with mortgages, while the industry currently only contributes about one per cent to the country’s Gross Domestic Product.
He said when compared with other countries, even in Africa, Nigeria was lagging behind, adding that trying to get solutions to these problems was what led to the initiative.
Akinlusi stated that the ‘My Own Home’ scheme would help revamp the housing finance industry and also make access to housing finance a lot easier through the NMRC, which would providing long-term refinancing of mortgages and standardised mortgage procedure.
“There is also the Mortgage Guarantee Scheme, where borrowers with insufficient or no equity contribution can access mortgage for homeownership, and the Housing Microfinance Scheme, which will stimulate increased lending to low-income earners in the formal and informal sectors through microfinance banks for incremental housing construction,” he added.
The Executive Secretary, MBAN, Mr. Kayode Omotosho, said other measures such as involving insurance companies to help investors with equity contribution through their stake in the pension funds were also being worked on.
He stated, “We are talking to the National Pension Commission and very soon, the guidelines will be out and those Nigerians contributing can use up to 25 per cent of their contributions of up to 60 months or five years as equity for mortgage loans.
“In addition to the NMRC, which tackles long-term funding, we also have the Mortgage Warehouse Funding Limited, which will take care of short-term funding. We call this initiative native intelligence to tackle our own challenges. In the past, we must have had issues but now, we need to talk to Nigerians on what to do to own their homes seamlessly.”
According to Omotosho, the recapitalisation of mortgage banks has prepared them for the new initiatives.
He said there had also been improved operational efficiency for mortgage banks with the seamless integration of the customers of mortgage banks into the Bank Verification Number platform and issuance of NUBAN numbers to facilitate online transactions.
“There has also been inclusion of the informal sector with the distinct Uniform Mortgage Underwriting Standards; the amendment of the Pension Act to facilitate withdrawals from the Retirement Savings Accounts for down payments on equity contribution to boost inclusion and reduction in cost of title registration and transfer from 13 per cent of property value to three per cent in Lagos and Kaduna states,” he said.
Akinlusi stated that under the ‘My Own Home’ scheme, 34 primary mortgage banks, four commercial banks and nine microfinance banks had been selected to stimulate housing finance for low-income earners in the formal and informal sectors.
He added that they would benefit from the $15m Housing Microfinance Fund and the $10m Technical Assistance Fund, with LAPO Microfinance Bank as pivot of the pilot scheme in the housing sector.
He explained, “The scheme has set up a framework that will revamp the housing finance sector and also make access to housing finance a lot easier. Unlike the conventional mortgage, the scheme allows beneficiaries to use the loan for the purchase of land and incremental building or renovation.
“People need to know that as long as they continue to pay rents as tenants, they are paying the landlord’s mortgage. They can use this same amount for mortgage and become house owners. When you remain a renter, you have helped the landlord to secure his own house, which will appreciate with time.”