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Nigeria mortgage economy: Need for active insurance industry

 

Like action and reaction, insurance and mortgage are equal and opposite and this is why, in advanced economies of the world, an active insurance industry is highly needed for the mortgage economy. While mortgage lending is a risk, insurance, by its function, acts as a hedge against risk. It is a cover.

To develop a healthy mortgage industry, therefore, there is need for a mortgage insurance functioning as a policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage.

This is why the new the Mortgage Guarantee programme, a new initiative by the Central Bank of Nigeria (CBN), is quite instructive. This is a kind of mortgage given to a borrower by a lender, where an identified third party will take responsibility for the loan if the borrower defaults. The programme is structured in such a way that once the borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage.

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Besides incentivizing mortgage lenders, a quality mortgage guarantee programme is also used to provide credit loss protection to lenders in case of borrower’s default and, according to CBN officials, a robust primary mortgage market is a synergy of several components, all working together to effect affordability and access for intending buyers.

Investopedia, an encyclopedia of investment initiatives, identifies three aspects of mortgage insurance. These are private mortgage insurance (PMI), mortgage life insurance, or mortgage title insurance. What these have in common is an obligation to make the lender or property holder whole in the event of specific cases of loss. Private mortgage insurance may be called ‘lender’s mortgage insurance’ (LMI) if the premium on a PMI policy is paid by the lender and not the borrower.

For these reasons and more, an active insurance industry is needed for the growth and development of a functional mortgage industry. The mortgage industry in Nigeria is still a fledgling and fingers are frequently pointed to an insurance industry that is not as active participant as it should be.

For some reasons, in this country, in spite of everything the people have learnt, policy is still shaping the industry whereas, in advanced economies, it is the other way round—industry shapes policy because people in the industry are the ones implementing the policy every day.

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The mortgage industry in United States, for instance, has been robust for decades and it is with continued activity. One is not however, saying that Nigeria should replicate what happens in the US here, because Nigeria has its own unique characteristics which must be recognized and respected.

What the mortgage players in Nigeria should do however, is to make the US system a base-line because that system represents the global standard. Adenike Fasanya-Osilaja, a mortgage and finance consultant advises that “we have to start learning that system and adapt it to meet our own unique cultural system and unique needs”.

Nigeria needs to lay a very good foundation for mortgage industry growth to ensure that what happened in America in 2006 with sub-prime mortgage crisis does not repeat itself here. The Nigerian Mortgage Refinance Company (NMRC) is a big possibility that can change and shape the mortgage system in this country and could also be an umbrella for the industry.

One of the high points of NMRC, as a secondary mortgage institution, is its long term, low rate global funds and, because the mortgage industry here is not yet buoyant, NMRC, whether it is succeeding now or not, can be a significant tool for achieving these attributes of a working mortgage industry.

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Fasanya-Osilaja believes that the mortgage industry should be shaping NMRC and not NMRC shaping the industry, advising that the Central Bank of Nigeria (CBN), through the NMRC, should be listening to the voice of the industry. “Experience has proved to me that the CBN is quite ready to listen and learn. The problem here, however, is that the industry has been rather passive”, she noted.

This industry has to be standardized so that global players, from global perspectives, could view the local industry from the perspective of NMRC and mortgage banking association of Nigeria (MBAN) and see something to hold on to in their investment decisions. Despite the current challenges, the Nigerian economy could conveniently support the growth of the mortgage industry as the country is one of the fastest growing economies in the world where talent resource is amazing.

The mortgage consultant advises further that Nigeria needs to understand there is time for competition and also time for association and each is as critical as the other. “The only thing that will stop this industry from growing is over-regulation by people who are not in the industry and therefore will not understand the effect of their policy on the actual market”, she said, emphasizing the urgency of an active insurance industry to drive the needed growth in the mortgage industry.

As a step forward, mortgage insurance could come with a typical ‘pay-as-you-go’ premium payment, or may be capitalized into a lump sum payment at the time the mortgage is originated. For homeowners who are required to have PMI because of the 80 percent loan-to-value ratio rule, they can request that the insurance policy be canceled once 20 percent of the principal balance has been paid off.

Chuka Uroko

Using mortgage finance to tackle housing deficit

 

The housing sector is one of the indices for measuring the standard of living of people across societies.

It also plays a more critical role in a country’s welfare than is always recognised, as it directly affects not only the well-being of the citizenry, but also the performance of other sectors of the economy.

Consequently, governments designed mortgage finance to enhance its adequate delivery as housing provision requires huge capital outlay, which is often beyond the capacity of the medium income/low income earners.

Despite its recognized economic and social importance, housing finance often remains underdeveloped.

The low levels of lending reflect the small numbers who can afford mortgages because of the high cost of houses in relation to incomes.

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It also includes the perceptions of risk that are based on, amongst other things, the informal nature of most title deeds and property.

The National Housing Policy of 1991 created a two-tier housing finance structure with Primary Mortgage Banks (PMBs) at the first tier and the Federal Mortgage Bank of Nigeria (FMBN), the supervisor and regulator, at the second tier.

The Mortgage Institutions Act (No. 53 of 1989) prescribed the regulatory/supervisory framework for the establishment and operation of Primary Mortgage Banks (PMBs).

Later, the Banks and other Financial Institutions Act of 1991, “BOFIA”, as amended, transferred the licensing, supervision and regulation of PMBs and FMBN to the Central Bank of Nigeria (CBN).

Under the process, the PMBs are to mobilise funds for their lending operations.

Some of such loans (mortgages) can be off-loaded to the Federal Mortgage Bank of Nigeria to sustain continuous liquidity in the National Housing Fund (NHF) Scheme.

This flow has unfortunately been constrained by the provisions of the Land Use Act, which restricts access to legal title to land.

To encourage the penetration of the mortgage finance and homeownership, the National Housing Fund Law (Act No.3 of 1992) was promulgated to create an alternative and continuous flow of funds from which loans could be granted to contributors on affordable repayment terms.

The law stipulates compulsory contributions of two and a half per cent (2.5per cent) of basic salary by employees earning N3, 000.00 or above in the public and private sectors, which attracts attract yearly interest at compound rates, refundable to contributors on attainment of 60 years of age or on retirement from employment after 35 years of service.

The loan attracts a fixed interest rate of not more than six per cent and repayment is for a maximum period of 30 years while maximum amount loanable is N15 million.

In its strategic move designed to make homeownership more accessible and affordable for Nigerian workers, FMBN recently approved the implementation of a Rent-To-Own Housing Scheme, an innovative affordable housing product, which provides an easy and convenient payment plan towards homeownership for Nigerian workers.

The scheme is specifically designed to make it possible for Nigerian workers to move into FMBN homes as tenants, pay for and own the properties through monthly or yearly rent payments spread over periods of up to 30- years.

To further increase affordability, the properties will also attract a single digit interest rate of 9per cent on the price of the property on an annuity basis.

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The product will cover properties with the maximum value of N15million.

The rent-to-own housing product targets Nigerian workers who are contributors to the NHF and will be implemented in phases. About 3,000 houses are planned for the pilot phase.

To deliver on the rent-to-own housing scheme, FMBN will partner with reputable estate developers for the construction of quality, cost-effective housing stock nationwide.

Payments for the houses will be domiciled with the CBN through the Treasury Single Account (TSA).

Properties that are planned for the rent-to-own scheme are existing estates that are funded by FMBN nationwide and non-funded estates.

FMBN Managing Director/Chief Executive Officer, Ahmed Dangiwa stated that the programme is targeted at increasing access to affordable housing by Nigerian workers who fall into the low- medium income brackets.

In addition, he stated that the implementation of the scheme will totally eliminate the burden of equity contributions by workers for housing loans, complement the existing products of the bank by widening the home ownership bracket, increase housing stock, and help the bank to utilize abandoned estates that are to be transferred to the scheme.

To further deepen the housing finance, the private investors are also being enlisted to boost affordable social housing delivery for Nigerians.

Alhaji Aliko Dangote and Alhaji Abdul Samad Isyaku Rabiu, Chairmen & CEOs of Dangote and BUA Groups of Companies respectively plan to partner the FMBN.

While on a joint courtesy call on the bank’s Board of Directors, they entered into partnership agreement and lent their support to the proposed N500billion recapitalization of the bank, stating that it is a much needed development that will help power FMBN’s efforts to more effectively discharge its mandate.

The Chairman, Dangote Group commended FMBN for the renewed aggressive drive to provide affordable housing for Nigerians.

Additionally, he said that his company is ready to collaborate with FMBN towards lowering the housing deficit by increasing the tempo and scale of social housing provision across the country.

His words: “Count me as a friend of FMBN. We are open to collaborating and supporting the good work that your bank is doing towards ensuring the provision of affordable housing to medium and low income earners in Nigeria.”

In the same vein, the Chairman, BUA Group of Companies, Abdul Samad Isyaku Rabiu also said that he is committed to a close partnership with FMBN.

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“I am committed to forging a partnership that will add value to FMBN’s work and look forward to further engagements in this regard,” he said.

In his response, the FMBN Board Chairman, Dr. Adewale Adeeyo on behalf of the board and management thanked and applauded the two distinguished business moguls for their visit and good intentions to partner with FMBN.

He said that FMBN will work closely with them towards the consolidation and implementation of the partnerships.

Another boost to housing development is currently underway through a strategic collaboration between FMBN and leading labour unions, aimed at addressing in a structured and sustainable manner, the housing requirement of their members currently estimated to be about 3,750,000 housing units.

The FMBN in conjunction with the Nigeria Labor Congress (NLC), Trade Union Congress (TUC) and the Nigeria Employers’ Consultative Association (NECA) plans to commence the implementation of a national affordable housing delivery programme for Nigerian workers.

This includes fast-tracking the provision of safe, decent, quality and affordable housing to registered members of NLC, TUC, and NECA that also contribute to NHF, which the FMBN manages.

The pilot phase of the program aims to deliver 2,800 housing units in 14 sites across the country. This includes 200 houses in each of the six zones in addition to Lagos and Abuja.

FMBN Group Head, Corporate Communications, Mrs. Zubaida Umar said the key features of the housing program are the emphasis on affordability and the focus on low and middle-income classes of workers.

Planned house types therefore include fully finished semi-detached bungalows and blocks of 1 bedroom, 2 bedrooms, and 3 bedrooms.

She revealed that the designs of the houses are based on local and international social housing models that have been tested and proven to deliver housing units that are structurally strong, livable and at cost effective rates that fit the income of the targeted beneficiaries.

“To ensure successful execution of the program, the design and implementation plan was based on extensive deliberations and recommendation of housing experts.

They drew from the theoretical and practical experiences of housing stakeholders, varied inputs, and consultations with developers, private sector players, research and analysis of housing projects locally and abroad,” she said.

Chinedum Uwaegbulam

Saudi refinance firm plans Islamic bond issues to fund mortgage drive

 

Government-owned Saudi Real Estate Refinance Co (SRC) plans to begin issuing Islamic bonds in coming months to finance its drive to expand the kingdom’s home mortgage market, its chief executive said on Monday.

Founded in 2017 by the Public Investment Fund (PIF), the country’s top sovereign wealth fund, SRC has so far operated with financing from the PIF and short-term deals with banks.

It will now begin issuing sukuk to raise money, first in Saudi riyals but eventually in foreign currencies to attract international investors, Fabrice Susini said in an interview.

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Initial issues will be private placements but SRC aims to make its first public sukuk issue in late September or early October, probably of at least 300 million to 500 million riyals ($80 million to $133 million), he said.

SRC is part of a government-backed effort to solve one of Saudi Arabia’s biggest social and economic problems, a shortage of affordable housing, by developing the market for home loans, which is small by international standards.

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The company aims eventually to refinance 20 percent of Saudi Arabia’s primary home loans market, which authorities hope to expand to 500 billion riyals by 2020 and 800 billion riyals by 2028 from 290 billion riyals now.

So far, SRC has signed memorandums of understanding to provide banks and home finance companies with slightly less than 6 billion riyals of financing, through portfolio acquisitions and short-term deals.

Susini said increasing the availability of long-term, fixed-rate residential mortgages (LTFRs) would be key to growing the market. This month SRC began offering LTFRs of 15-20 years through banks and other finance firms.

So far, banks have generally offered such mortgages only to employees of major companies and other people with stable cash incomes. Susini said that with SRC’s intervention, LTFRs could ultimately account for half or 60 percent of the mortgage market rather than their current level of a third.

“We want to create a situation in which access to LTFRs is no longer restricted and they are available to the mass of people,” he said.

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Another goal of SRC, which models itself partly on U.S. housing finance firms Fannie Mae and Freddie Mac, is to jump-start a securitisation market in Saudi Arabia by packaging home loans into mortgage-backed securities for sale to domestic and international investors.

Susini, previously global head of securitisation at French bank BNP Paribas, said technical and legal preparations and other work on the project could take two or three years.

Andrew Torchia & Andrew Roche

FHA targets low income earners in new N27bn housing scheme

 

The Federal Housing Authority (FHA), Nigeria’s housing development agency, is targeting low income earners in the Federal Capital Territory (FCT) Abuja in its new housing project valued at N27 billion.

On completion, the scheme will deliver 1,650 housing units of different configurations. This means that the staggering housing deficit in the country will be reduced by that number while a corresponding number of low income earning households will be taken off the property market.

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Nigeria has a heavy housing deficit burden which the World Bank in one of its reports estimated at 17 million units, a figure experts say has become not only trite, but also untenable, citing population growth, rising urbanization and increased number of school leavers that have attained home-owning age.

The FHA scheme comprises 550 homes located in Zuba, Kwali and Lugbe axis of the FCT. The buildings range from one-bedroom flats to five bedroom luxury apartments and it is expected that these projects would be delivered soon, though at different times.

“Zuba is almost completed while the one in Kwali is ongoing and Lugbe phase II has just started”, Mohammed Al-Amin, FHA managing director, disclosed, adding that there were also on-going projects in Apo, Guzape area of the FCT for the high-income earners which was 90 per cent completed.

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In its determination to serve every strata of the society, the housing authority is also planning to begin another scheme in Maitama area of Abuja which will consist of villas, duplexes and luxury houses.

Mohammed explained that the housing initiative, which was aimed to make houses affordable to the low-income earners was under the social housing scheme, adding that locating houses far away from the main city does not go well with the government, hence the initiative of building houses in the fringes of the city.

“The demand for the houses is high. None will be above five million and there are one to five bedroom houses. The good thing is, if you are going through the government mortgage system, you don’t have to pay what is called equity. You don’t have to pay 30per cent of the money before a house is given to you,” he assured low income earners who are scared of affordability.

The FHA boss advised buyers not to negotiate with anyone who is not a staff of the FHA. He assured that the digitization initiative engaged by FHA would eliminate double allocations, forgery of documents and ensure quick services.

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“There exist cartels who lie to potential buyers that they have land to give them. We keep telling Nigerians not to negotiate with anyone who is not an FHA staff. Even if the person is from FHA, you should ask him if he is from estate department. Only people in estate department and, to some extent marketing department, are allowed to interact with the public”, he warned.

CHUKA UROKO

AG Mortgage Bank promotes affordable housing in Enugu

AG Mortgage Bank Plc., a Primary Mortgage Bank in the country, has enabled no fewer than 89 subscribers in Enugu to become home owners under the Federal Mortgage Bank of Nigeria (FMBN) National Housing Fund (NHF) Scheme designed to promote home ownership across the country.

The keys to the houses, according to the Managing Director and Chief Executive Officer , AG Mortgage Bank Plc, Mr.  Ngozi Anyogu, were delivered to the happy home owners recently in Enugu.

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According to the Chief Executive Officer, the houses were developed by the COPEN group, a reputable property development company with projects across the country.

All the houses are within the Jedidiah Gardens Enugu which provides a good ambience for home owners

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AG Mortgage Bank “is an active operator of the NHF Scheme, and has disbursed in excess of N3 billion to over 390 NHF beneficiaries” he said.

Access to mortgage loan under the Federal Mortgage Bank of Nigeria – National Housing Fund Scheme, according to the Chief Executive is open to all Nigerians with verifiable stream of income who are contributors to the NHF scheme.

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Anyogu urged Nigerians in all spheres of endeavour to take advantage of FMBN/NHF scheme and AG Mortgage Bank’s other mortgage products namely: The Tenant – Owner -Mortgage (TOM); a rent to own programme, Leap Into Mortgage (LIMO) product, an incremental mortgage arrangement, that fits home buyers at different income levels.

Weekly mortgage applications rise 1.6% as interest rates hit a 7-year high

 

Interest rates for home loans appear to be climbing again, and that may in fact be what’s getting borrowers back to their brokers — fear that rates could move significantly higher in the coming months.

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Total mortgage application volume increased 1.6 percent last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted report.

Refinance volume led the charge, rising 4 percent for the week, although it was 39 percent lower compared with the same week one year ago. A year ago last week, rates were nearly a full percentage point lower.

The refinance share of mortgage activity increased to 39 percent of total applications from 37.8 percent the previous week.

Fleming: The housing market is shifting from a seller’s to a buyer’s market  

Borrowers who might have been thinking rates could move even lower may now be reacting to a new surge in rates, thinking they’d better get in now while the getting is still relatively good.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) rose to its highest level in more than seven years, 4.88 percent, from 4.84 percent, with points decreasing to 0.44 from 0.46 (including the origination fee) for loans with a 20 percent down payment.

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“As markets received various pieces of data indicating economic strength such as wage growth, inflation, and jobless claims, Treasury rates were up over the week,” said Joel Kan, an MBA economist.

Mortgage applications to purchase a home were basically flat for the week, moving just 0.3 percent higher. They were, however, 4 percent higher than the same week one year ago. Purchase applications were pretty slow all summer but have gained on an annual basis for the past five weeks.

Rising rates will only exacerbate already weakening affordability. Home prices continue to see gains, albeit smaller increases than in the past few years. Buyers are pulling back in high-priced markets like California, where homes are now sitting on the market longer and seeing price cuts.

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“With additional rate hikes on the horizon, mortgage rates will likely only continue to rise and squeeze the market,” said Mike Loewengart, vice president of investment strategy at E-Trade. “Right now there are a ton of positive signals in the economy, but clearly the housing sector is an increasingly glaring exception, and suggests the historic period of expansion we’ve enjoyed for the past decade could be winding down.”

Diana Olick

FHF to deliver decent accommodation for fairly low to modest income earners

 

The Managing Director of Family Homes Fund (FHF), Dr. Femi Adewole has said that FHF is committed to doing an excellent work in providing housing that people on low income can afford.

He made this statement during an Interview with HousingNews Crew earlier today in his office.

“we are doing tons of work in ensuring that we bank adequate land in good locations where these homes will be sited.

“We are ensuring that we maximize the efficiency of the design of these homes which is key to ensuring that we deliver the affordability that our people need” He said

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According to Dr. Femi, In line with the mandate which is centered on providing large scale affordable housing supply and economic development, “FHF is working in partnership towards providing up to 500,000 homes and 1.5million jobs from now till December, 2023”

“Primarily, we are working with partners who can build to scale so that we can harvest the economies of skills that then goes on to deliver lower prices to our target customers”

“we are currently talking to REDAN, Housing Corporations, Federal Ministry of Power, Works & Housing, State Governments, and other parastatals. We are bringing a whole range of people together to partner with us as they all have key roles in ensuring that this programme succeeds” he said.

Dr. Adewole said that FHF is putting a structure in place that allows people to actually be able to afford those houses and be able to buy them even after they have been built.

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“We are coming up and in the final stages of designing home loans assistance program that will ensure that our target market which is basically people who are earning fairly low to modest income can have access to decent accommodation at no more than 30% of their income.” He said.

The M.D. Family Homes Fund expressed with assurance that FHF being the largest housing fund in Sub-Saharan Africa stands a strong chance in delivering on its mandate.

“Because of the large capital that we have, the Family Homes Fund is the largest housing fund in sub-Saharan Africa so we are financing the program with a significantly concessionary interest and rate for development. If we put all those things together, I think it gives us a strong chance for delivering on the mandate.”

Wilson Ifeoma, HousingNews, Abuja.

Mortgage penetration in Africa: Nigeria ranks low

 

Nigeria has been ranked low among countries in the area of mortgage penetration and depth for home-ownership in Africa.

According to a report by Senior Advisor, UN-Habitat, Dr. Xing Guan Zhang, out of 31 countries ranked for the exercise, Nigeria took 27 position, scoring 0.3 per cent in mortgage penetration ahead of Guinea, Senegal and Burundi.

In the report, Malawi, Djibouti, Chad, Mauritania, Mauritius, Tanzania, South Africa, Angola, Liberia, Ghana, Togo, Rwanda, Botswana, Zambia and Cameroun took first to fifteen positions.

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In the area of mortgage depth, Nigeria was also scored low, ranking 10 with 0.4 per cent among 17 Africa nations considered for the exercise.

Countries such as South Africa, Namibia, Kenya, Botswana, Senegal, Rwanda, Algeria, Uganda and Cameroun were ranked 30 per cent, 20 per cent, 2.5 per cent, 2.3 per cent,2.0 per cent, 1.2 per cent, 1.2 per cent, 1.0 per cent and 0.5 per cent respectively ahead Nigeria.

In his report on “Financing and Developing Affordable Housing in Africa: What We Have Learned and How We Can Do Better,” Zhang noted that mortgage penetration and depth were much higher in wealthy countries.

He said: “When inflation is high, the interest payment is high in real values in the beginning, but this declines over years, if it is a fixed-rate mortgage.”

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Nigeria’s mortgage market has remained in slow growth due to plethora of reasons, some of which are now being addressed by major stakeholders in the mortgage industry.

The Nigeria Mortgage Guarantee Company (NMGC), Model Mortgage Foreclosure Bill and the Uniform Mortgage Underwriting Standards for both the formal and informal sectors of the economy are the most outstanding of the new initiatives in the industry.

Also, partnership among the Central Bank of Nigeria (CBN), the Nigerian Mortgage Refinance Company (NMRC) and the Mortgage Banking Association of Nigeria (MBAN) is more than enough comfort for both investors and home seekers.

To address the problems associated with land processes, the CBN is partnering with NMRC, which spear-headed the drafting of a Model Mortgage Foreclosure Bill, as well as MBAN and other strategic partners, to encourage the passage of a model mortgage foreclosure law in every state of the nation.

The apex bank has also provided states with the draft MMFL, and has held an MMFL workshop with their key representatives to ease their task to passage of the law.

Meanwhile, the nation has a housing deficit of about 17 million units and its mortgage rates ranging between 7-10 per cent for the National Housing Fund (NHF) and between 15-25 per cent for commercial mortgage institutions, which is considered by industry experts as one of the highest in the world.

According to the National Bureau of Statistics, real growth rate of the real estate sector, real GDP growth recorded in the sector in first quarter (Q1) 2018 stood at -9.40 per cent, lower than growth recorded in Q1 2017 by 6.30 percentage points and lower by 3.48 percentage points relative to Q4 2017.

Quarter-on-quarter, the sector grew by -30.57 per cent in the Q1 2018.

It contributed 5.63 per cent to real GDP in Q1 2018, lower than the 6.34 per cent it recorded in the corresponding quarter of 2017 and lower than the 7.03 per cent in the preceding quarter.

 

Dayo Ayeyemi

Legislative reform and drive towards model mortgage

 

To mortgage sector stakeholders in Nigeria, the need for a functional mortgage system cannot be over-emphasised. This is why the drive towards a model mortgage is receiving all the attention that it requires.

At the fore-front of this drive is the Nigerian Mortgage Refinance Company (NMRC) which is riding on the relative successes it has achieved in the past couple of years of its establishment and pushing for the adoption of a model mortgage and foreclosure law by the states.

As part of efforts at growing a mortgage system that will drive affordability, the company is presently driving a legislative reform in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.

What the company is driving at, according to one its directors whose primary mortgage bank is a major shareholder in the company, is to get various states houses of assembly to pass foreclosure laws as a prelude to mortgage-backed affordable housing delivery.

This is good news for home seekers who may need mortgage facility because foreclosure law, upon adoption, aims to fast tract the process for creating legal mortgages, ensuring timely resolution of disputes and creating an efficient foreclosure process.

According to the authorities of the mortgage refinancing company, the model mortgage and foreclosure law is in its final form for engagement with 21 pilot states committing to the implementation of an enabling environment for the development of the mortgage market.

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The company hinted that it would be focusing on building capacity and completing outstanding operational activities. “We will be embarking on an aggressive drive towards the procurement of an ICT infrastructure for the mortgage industry, the completion of our second tranche equity capital raise, and most importantly the completion of our first round of mortgage refinancing; we will work hard to meet our mandate to revolutionize the Nigerian mortgage landscape”, an official of the company hinted.

The company has demonstrated uncommon resolve to live out its mandate with refinancing of some mortgage banks. Mortgage operators have described this refinancing as a milestone and, according to Ben Akaneme, Imperial Mortgage’s managing director, “this is an outstanding achievement in the march towards the realisation of affordable and single-digit interest rates for mortgages in Nigeria. He assured that his bank would continue to strive to achieve its mission of enabling easily accessible and affordable mortgages to Nigerians in order to ensure housing for all.

NMRC seems to be conscious of the demands and obligations inherent in the Nigerian business environment as it assures that it will continue to anchor all its services on global best practices, good corporate governance and strict risk management practices.

By now, the company might have got from its shareholders the approval to, among other things, increase their capital base for three main reasons including capital adequacy, mortgage refinancing and procurement of necessary infrastructure.

As at the time when this request was made, the shareholders who saw the need for capital adequacy for the company, especially for its mortgage refinancing function, could not, however, come to terms with the management‘s explanation on the issue of infrastructure and, therefore, insisted that the capital raise be put on hold until the management was able to spell out those items of infrastructure that made the capital raise necessary.

NMRC came into the Nigerian mortgage market on a very high pedestal, promising a major shift in the interest rate regime in the market. But the authorities of the company have said that, though it is a partnership between the government and the private sector, the company operates as a private sector-led institution, relying on the market to determine interest rate on mortgage loans, meaning that the rate that applies to commercial loans also applies to its mortgage.

“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, the official said, adding, “as it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”.

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Right now, the company is working under market conditions hoping that, over time, as the market deepens and grows, the issue of single digit interest rate will be expected. Whatever the rate is today, the desire is to drive it down to single digit.

Chuka Uroko

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