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Mortgage Borrowing Rise Signals Stabilisation in UK House Market

6 UK mortgage borrowing picked up slightly in June, suggesting the housing market may be regaining some stability after stalling in the run-up to the original March Brexit deadline.

Figures released by the Bank of England on Monday showed mortgage approvals for house purchases — an indicator of future lending — increased by about 800 to 66,400 in June, slightly higher than analysts had expected and above the monthly rate of 60,000 projected by the BoE in its May inflation report.

Households’ net mortgage borrowing of £3.7bn was also higher than in May, although the annual growth rate of mortgage lending remained stable at 3.1 per cent — around the level it has been at since the vote to leave the EU in 2016. Brexit-related uncertainty and political turmoil has weighed on UK property markets, with house price growth slowing across the country and prices falling sharply over the past year in London.

However, the most recent data have pointed to a modest improvement, with surveyors polled by RICS, the industry association, becoming less pessimistic about market dynamics.

Howard Archer, economist at the consultancy EY Item Club, said the reprieve from a disruptive Brexit in March, together with better consumer purchasing power and strong jobs growth, had helped, although “the overall benefit has been relatively limited”. The BoE data also showed a slight increase in consumer credit growth, which rose by £1bn in June, compared with £0.9bn in May.

However, the annual growth rate — which has fallen steadily since 2016 — continued to slow, falling to 5.5 per cent in June from 5.7 per cent a month earlier. Within this, the annual rate of growth in credit card lending has also slowed. Consumers’ apparent restraint could be a worrying sign, since household spending has been the main driver of economic growth in recent months.


Businesses have been reporting slowing activity and recent data suggest the economy may have flatlined in the second quarter, but households have benefited from record employment, modest tax cuts, a lift in public sector pay and the latest rise in the national minimum wage. Samuel Tombs at Pantheon Macroeconomics consultancy said that since lenders no longer planned to reduce the supply of consumer credit, the data were “consistent with the economy retaining momentum ahead of the Brexit deadline”.

The BoE data also showed a pick-up in borrowing by non-financial companies — largely in the form of bank loans and corporate bonds. Mr Tombs saw this as positive, arguing that demand for external finance would be falling if the slump in business investment was worsening. He also noted that net issuance of commercial paper — a way to raise short-term funds — was falling, after a spike in the first quarter of the year, when companies were struggling to find cash for pre-Brexit stockpiling.

Source: ft

First-Time Buyers ‘Underestimate Size of Deposit’

Aspiring homeowners are substantially underestimating the size of the deposit they need to get on the housing ladder, while women save half as much as men, according to research underlining the barriers facing first-time buyers. In a survey of about 5,000 UK adults aged between 18 and 40 — treated as a sample of potential first-time buyers — Santander Mortgages found two-fifths (42 per cent) of respondents had saved nothing towards their first home. The average pot saved towards a deposit among other respondents was £8,300, with men saving an average £11,600 and women £5,620.

When asked what they were targeting as a total saving for a deposit, participants’ responses averaged £24,816 — significantly below the average deposit of £44,000 put down by first-time buyers in figures published in March by the Office for National Statistics. Santander said the aim of home ownership was moving out of reach even for middle earners.

“With the majority of mortgage borrowing limited to 4.5 times gross salary, the deposit amount buyers in each region say they are looking to save would price individuals, or households relying on a single middle income, out of every region in the UK,” the lender said.

The proportion of middle earners — those bringing in between £20,000-£30,000 in 2019 — who own their own a home has declined from 65 per cent in 1996 to 27 per cent today, the report said.

Today, buying is increasingly restricted to those with higher levels of household income and dual-income couples. Some 64 per cent of first-time buyers have household incomes of more than £40,000 and 16 per cent are individual buyers. Miguel Sard, managing director of Santander Mortgages, said the situation was likely to worsen unless the government took further action.

“Without change, home ownership in the UK is at risk of becoming the preserve of only the wealthiest young buyers over the next decade.” The warning comes at a time of intense competition between mortgage lenders, with many offering low rates and other deals, and growth in the number of home loan deals at loan-to-value rates above 90 per cent. Yet high house prices in many areas and tight mortgage regulations have still left many buyers struggling to pass lenders’ affordability tests.

The survey also quizzed people on what they would like to see the government do to help first-time buyers. Top of the list, with 37 per cent in favour, was a call to extend Help to Buy, the government’s popular equity loan scheme that is due to end in 2023. Thirty-five per cent would support rent caps; while 33 per cent were in favour of stamp duty land tax being cut for buyers of homes under £500,000 — a proposal floated by Boris Johnson during his campaign for the leadership of the Conservative party.

Santander did not lend its support to those proposals but used the survey as an opportunity to sound its own call to action. Noting that the inability to raise a deposit was seen as the biggest barrier to ownership among aspiring buyers, it suggested an extension of the current Forces Help to Buy scheme, which allows those in the armed forces to take an interest-free loan of 50 per cent of their annual salary towards the purchase of a home, to a maximum of £25,000. This scheme could be extended to public sector workers such as nurses and police, Santander said.

It also questioned the “stress rate” that regulators require lenders to use when judging whether a mortgage is affordable. Borrowers must be able to afford the loan under a notional interest rate that is 3 percentage points higher than the rate customers revert to at the end of a fixed rate period. Graham Sellar, Santander head of mortgage business development, said the stress rate was originally based on a five-year projection of interest rates by the Bank of England.

Today, similar projections look much flatter in the medium to long term. “It’s a call to look at that figure and to make affordability better for customers, especially first-time buyers.” The research also underscored the role of the Bank of Mum and Dad in supporting first-time buyers. Forty per cent of those interviewed said they were relying on an inheritance to boost their deposit — much higher than the 10 per cent recorded in government statistics who used an inheritance for this purpose in 2017-18.

The authors warned that the role of housing equity in providing a stepping stone for the next generation was limited. “As life expectancy increases, we can expect the number of people in care to increase and the wealth they have built up through property ownership quickly diminished,” the report said.

Source: ft

Bad Structure, Not Capital Base Seen as Mortgage Industry’s Major Challenge

Contrary to the belief that lack of long term capital or low capital base is the main challenge of Nigeria’s mortgage industry, stakeholders in the industry and property sector analysts have spilled the beans, revealing that the structure of the industry contributes the most to its set back.

Over 10 industry players and analysts polled in a BusinessDay survey have, therefore, recommended a restructuring, not recapitalization, of the country’s mortgage system.

The industry has, in the last couple of years, seen far-reaching recapitalization and loans refinancing by the Nigerian Mortgage Refinance Company (NMRC), yet it is neither growing nor meeting market expectations, meaning that the problem of the industry goes beyond liquidity issues.

“The structure of the mortgage industry is the problem; there is high interest rate and this is coming on the back of economic condition,” Adeniyi Akinlusi, president of Mortgage Bankers Association of Nigeria (MBAN) and CEO, Trustbond Mortgage, told BusinessDay.

Akinlusi added that recapitalisation is not the main challenge, considering that mortgage banks do not “give loans from shareholders’ but fund from deposits.”

Nigeria has over 17 million housing deficit. According to the Association of Housing Corporation of Nigeria (AHCN), an umbrella organization for all federal and state housing agencies, more than 90 percent of new homes are funded from personal savings for incremental construction.

“The structure is the challenge; there is high default rate in the mortgage industry which is, most likely, because funds are diverted and not returned,” Adekunle Abdul, managing director, Metro & Castles Homes, said.

Kehinde Ogundimu, MD/CEO, Nigerian Mortgage Refinance Company (NMRC), the company “has refinanced mortgage loans totalling N18billion as at December 2018.”

He said it was in line with the company’s mandate to promote affordable home ownership in the country by leveraging funding from the capital market to deepen liquidity in the primary and secondary mortgage markets.

Imade Omogiafo is a single parent and a manager in one the consulting firms in Lagos. According to her, she has been trying to access a mortgage for the past two years without any positive result. “I sincerely cannot even tell what the problem is; I have signed up with more than three mortgage banks, but none has been able to come through with a mortgage,” Omogiafo lamented.

According to Abdulmalik Mahdi, managing partner at Modern Shelter Systems & Services Limited, an Abuja-based real estate firm, the players in the industry particularly financial institutions need to be innovative in approaching fundraising for mortgages.

“There is a lot of scope for financial engineering if the banks are willing to think out of the box,” Mahdi said, adding, “the primary mortgage banks in Nigeria are part of the problem. They are not efficient in their transaction processes; it takes ages to process simple loans and a lot of their staff lack capacity.”

Industry players are of the view that the key culprit for the housing challenges in Nigeria is the mortgage rate. Typically, mortgage interest rate in Nigeria ranges between 7-10 percent for Federal Mortgage Bank of Nigeria (FMBN) and between 15-25 percent for commercial mortgage institutions, making it one of the highest in the world.

In advanced economies, the mortgage industry makes significant contribution to economic development with single digit interest rates. Nigeria’s roaring inflation rate and the attendant high mortgage rate dampen housing demand and blunt developers’ investment appetite.

This is why Nigeria has one of the world’s lowest mortgages to Gross Domestic Product (GDP) rate at about 0.6 percent, which lags Ghana’s 2 percent, South Africa’s 30 percent and crawls after the US and UK rates of 60 percent and 70 percent respectively.

“There are some developed projects that do not have the right documentation, making it hard for such properties to be used for mortgage. This is coupled with the economic challenges; people in the middle class cannot afford a double digit mortgage rate,” Abiodun Akanbi, Head of Strategy at Infinity Trust Mortgage Bank, said.

Ayo Ibaru, COO/Director , Real Estate Advisory at Northcourt, agrees, noting that both recapitalisation and the structure of the mortgage industry need to be improved. “The structure of the mortgage industry and the cost of funds need help; it takes too long to get approval and documentation for real estate projects, the land also costs too much and about 90 percent of the raw materials used by developers are imported,” Ibaru explained.

Despite the real estate sector getting out of the woods as it broke its 12 consecutive quarters of decline by recording 0.93 percent growth in the first quarter of 2019, banks’ confidence in the sector waned as reflected in credit allocation to the sector which tumbled to its lowest level at 3.92 percent in four years.

Sectorial credit allocation to real estate shed 0.2 percentage point quarter-on-quarter and 2.49 percentage point year-on-year.

Of the N15.21 trillion combined credit given to 17 sectors by banks, real estate got N596 billion in the first three months to March 2019, N26 billion or 4 percent lower than N622 billion received in the preceding quarter.

On the way to go in solving the problems in the industry, Ibaru said “there should be a rethink on how the structure of the mortgage industry should function and in doing that; the point of the consumers should be taken into consideration.”

“There is a need for greater regulation of the activities of some primary mortgage banks (PMBs) as they get away with a lot of things such as charges that make transaction costs too high for clients,” Mahdi recommended.

Source: businessdayng

How to own a Home with Mortgage Loan

If you don’t have the cash to own your dream house now, you can gradually acquire it by getting a mortgage loan from your bank.

All that is required is that you should get an asset located in an approved location by the lending institution, meet some necessary requirements and gradually repay the loan.

A mortgage loan is a long-term credit facility that is designed to part-finance the acquisition, construction or refinancing of residential houses in areas approved by the lending institution.

You can be living in the house before you finish paying for it.

The minimum tenure to repay a mortgage loan can be as low as one year, while the maximum period can be up to 20 years or a specific retirement age ranging between 50 and 60 years.

The repayment of the loan could be monthly or as approved by the bank, comprising the principal and the interest.

If a borrower has the cash to offset the loan before the number of years he planned, he can approach his bank to discuss the option of paying off.

The amount usually approved ranges between  N1m and N150m, depending on the location of the property.

If you feel you cannot meet up with the financial obligation, some banks may allow you to jointly apply for the mortgage loan with your spouse.

Before granting approval to the borrower, banks will always do some assessment of the property.

To enjoy this facility, you have to meet the following conditions.

  • You must have a bank account with the lending institution where you are applying for the loan.
  • An intending house owner must submit an application letter and fill a mortgage loan form.
  • You must either be under paid employment or be able to prove to your bank that you have a regular flow of income.
  • The applicant must pay an initial deposit of the total asset, which can be between 30 and 40 per cent.
  • The property to be financed must be residential and not for commercial purposes.
  • You must present documents such as recent pay slips for salary earners, a statement of accounts, a letter of irrevocable domiciliation of salary account with the bank, a letter of introduction from your employer, an offer letter from the owner, a valuation report if it is an old house, a bill of quantity if it is a construction home loan, and a copy of the title document to enable a legal search.
  • The major collateral for the loan is the exclusive charge of the property to be financed, by giving the title deeds to the lender.
  • The loan could be for outright purchase, construction mortgage, or home equity (refinancing).
  • Monthly repayment shall not exceed a certain percentage of the applicant’s net monthly salary such as 35 per cent
  • In most cases, the applicant will be required to have a comprehensive insurance policy for the property.

Source: punchng

World African Nations Risk Mortgaging Future for Today’s Consumption

The Chief Economist for Africa at the World Bank Group, Mr Albert Zeufack, has expressed worry at the huge amount of money used by some African countries to service their debts.

In a press statement issued last Wednesday, the global lender said Africa’s poorest countries saw little to no progress on average in improving the quality of their policy and institutional frameworks in 2018, according to its annual Country Policy and Institutional Assessment (CPIA).

It noted that the average CPIA score in Africa’s 38 International Development Association (IDA)-eligible countries in 2018 remained unchanged at 3.1 on a scale of 0 to 6, with some areas of social policy seeing improvements while macroeconomic management weakened, adding that the rule of law, accountability and transparency, and the quality of public administration remained major areas that impede the efficient use of public resources across the region.

This year’s CPIA Africa report takes a closer look at debt management, as the median government debt-to-GDP ratio reached 54.9 percent of GDP in 2018, an 18.5 percentage-point increase since 2013. At the same time, the share of foreign currency bonds in total external debt increased by 10 percent while the shares of debt owed to commercial and non-Paris Club creditors rose by 5 percentage points since 2010, and sovereign bond issuances have increased rapidly.

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Mr Zeufack, who was quoted in the statement, stressed that, “Some African countries are at risk of mortgaging their people’s futures in favour of today’s consumption,” pointing out that, “When countries spend most of their revenue servicing debt, fewer resources are left for education, health, and critical services for their people. This stops progress in its tracks.”

Taken together, the increase in debt levels paired with the shift of external debt toward more market-based, more expensive, and riskier sources of finance have increased debt vulnerabilities substantially among IDA countries in Sub-Saharan Africa. The report recommends that countries improve their debt management capabilities and systems, which can enhance transparency and help stabilize the economy in the long-term.

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Rwanda continues to top the CPIA ratings both in Africa and around the globe with a score of 4.0, followed in the region by Cabo Verde (3.8) and Kenya, Senegal, and Uganda (all at 3.7). South Sudan remained the lowest-scoring country on the CPIA with a score of 1.5, the report said.

Fragile countries in Sub-Saharan Africa improved slightly in the areas of gender equality, human development, and environmental stability, which bodes well for their ability to tackle the drivers of conflict and exclusion. In fact, fragile countries in Africa saw stronger performance in social inclusion than fragile countries in other parts of the world. Non-fragile IDA countries in Africa performed on par with their global peers overall, with the notable exception of social inclusion policies, where they underperformed especially on the issue of gender equality, it added.

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“Improvements in social inclusion and service delivery have historically been crucial elements of countries’ transitions out of fragility, so even modest steps count,” said Gerard Kambou, Senior Economist and Lead Author of the CPIA report.

“African countries, fragile and non-fragile, need to keep the focus on gender, education, health, climate, and governance issues alongside macroeconomic management if they want to see true and lasting progress,” Kambou added.

The report recommends that Africa’s IDA countries accelerate business regulatory reforms to support private sector development and improve domestic revenue mobilization in addition to strengthening their debt management. The report team plans to hold discussions on this year’s results and recommendations in several African countries in September 2019.

Mortgage market still waiting for MBAN and the Sukuk model

The saying that Nigeria is never in lack of good ideas but implementation is a fact and it is reflected in virtually every facet of the country’s life- economic and political; at individual and institutional levels. From public and private sector operators, Nigerians have seen brilliant ideas that, if implemented, could turn around the economy of the country and the well being of its people.

A couple of years ago, mortgage sector operators under the aegis of the Mortgage Banking Association of Nigeria (MBAN) gathered in Abuja for its chief executive officers retreat, to finalize its Uniform Mortgage Underwriting Standards for non-interest mortgages and to create platforms for better education of the employees and mortgage brokerage companies on the proposed model.

The operators also looked at other aspects of their business and decided to get a veritable funding source for the sub-sector. They moved to explore the suitability, applicability and possibility of adopting the non-interest mortgages to unlock the potentials of the Sukuk model.

These were good ideas that raised hope and expectations among mortgage-starved Nigerians. High Interest rate on mortgage loans remains the deep gulf between most Nigerians and homeownership.

This is why any move aimed at reducing interest rate and making mortgage not only accessible, but also affordable triggers expectations that some Nigerians would be taken off the housing market where over 20 million families are marooned, unsure of what to do next to exit the over-crowded space.

The Sukuk model which guarantees non-interest mortgages remains green in the minds of many home-seeking Nigerians, not the least other good ideas that came up at the Abuja chief executive officers retreat. And expectations continue to mount as MBAN and its members perfect their strategies.

It should be noted, however, that actually, MBAN and its members are, by these moves, plotting and pushing for the unbundling of mortgage origination process, further reduction in loan origination period, introduction of computerised land titling registration, land title insurance, introduction of uniform mortgage underwriting standards (UUS) for informal sector, enactment of foreclosure law, and wider public awareness for the sector.

This, they reason, has become necessary given the slow growth of their sector amply reflected in its low contribution to GDP which stands at 1 percent. They want to push this contribution to, at least, 5 percent in the short run, 30 percent in the medium term, and about 65 percent in the long run.

The sector is challenged in several ways which the operators blame on low mortgage penetration. This, according to them, explains why less than 5 percent of the housing stock in the country estimated at 13.7 million units are in formal title registration or mortgage.

Rose Okwechime, CEO, Abbey Mortgage Bank Plc , blames the slow growth of the sector on its relative newness and lack of public awareness on its operations and benefits. “A lot of people don’t even understand why they should put their money in a mortgage bank”, she says.

The operators advocated that MBAN should explore collaboration with building materials manufacturers to reduce the cost of houses and make housing affordable. They also resolved to explore viable options for cheaper sources of funds with a view to reducing the interest rate on mortgages to single digit.

Consequently, they planned a tripartite advocacy for intervention fund for the sub-sector in partnership with Central Bank of Nigeria (CBN), National Pension Commission (PENCOM) through the proposed interest rate matching fund scheme and a home-grown initiative for tying mortgage to pensions, which will encourage homeownership and lower interest rate on mortgage.

The communiqué on the retreat, signed by MBAN president, Adeniyi Akinlusi and the Executive Secretary, Kayode Omotoso, noted that since infrastructure constituted 30 percent of the cost of housing delivery, federal, state and local governments should strive to provide support to estate developers by stepping up provision of infrastructure to enhance affordable delivery.

The association planned to embark on constructive engagement/advocacy with the governments for improved infrastructural development to drive down the cost of housing delivery, especially for the low and middle-income earners.

They further recommended that Federal Mortgage Bank of Nigeria (FMBN) and MBAN should take necessary steps to fast track the evolution of new business models that would include strategies to streamline on-line processes for access to the NHF scheme to mitigate the challenges of response time to secure approval from FMBN on National Housing Fund (NHF) loan applications. It was also agreed that both FMBN and MBAN should collaborate to create public awareness on the NHF scheme, and its critical imperative to mortgage for home ownership in Nigeria.

The mortgage firms agreed that MBAN should collaborate with other stakeholders such as the CBN, Nigeria Mortgage Refinance Company (NMRC), FMBN and Real Estate Developers Association of Nigeria (REDAN) for the purpose of approaching the National Assembly for expedited action on amendments to the various laws affecting the mortgage/housing sub-sector; especially those related to foreclosure.

Source: businessdayng

Ways To Manage Your Mortgage

Keeping track of your mortgage can help you keep up with repayments, save money in fees, get you the best deal and run it smoothly. Here is how to manage your mortgage account, according to www.money.co.uk.

Think carefully before securing other debts against your home. You may have to pay an early repayment charge to your existing lender if you remortgage and other fees may be payable. Your home may be repossessed if you do not keep up repayments on your mortgage.

What happens after you get your mortgage?

Repay your mortgage

Once you have bought a property, you will be responsible for paying the mortgage on time and looking after the property.

Lenders charge a fee if you miss a repayment, and it could also damage your credit record and mean you have to pay more interest.

Set up a direct debit for your monthly repayments so they will be taken automatically from your account, and you will not miss any payments.

If you can choose a repayment date just after you are paid, there is less chance you will spend the money.

Manage your mortgage online

You can set up an online account to keep track of your:

Mortgage balance

Interest rate

Remaining term

You can usually sign into your online account to update your contact details or change the bank account your mortgage direct debit is taken from.

Alternatively, you can keep your account up to date or check your balance by contacting your lender by phone, post or in a branch.

Can you switch mortgages?

Yes, this is called remortgaging, and getting a better deal could save you money.

Make sure the fees are less than the amount you save by getting a lower interest rate. Here is how to check if a remortgage will save you money.

Look out for interest rate rises because they cause your repayments to increase.

Introductory rate mortgages

If you have an introductory rate like a fixed or tracker mortgage, when it ends you will be moved to a variable rate that is usually more expensive.

Check for a better deal two or three months before then so you have enough time to switch.

Variable rate mortgages

If you have a variable mortgage, the rate could go up at any time, so be prepared to switch if it becomes more expensive.

Build up an emergency fund to help you make your repayments if the interest increases unexpectedly.

Should you overpay on your mortgage?

You can overpay on your mortgage by:

Paying more than the amount due each month

Paying off a lump sum when you are able to

This could cut the amount of interest on your mortgage and get it paid off quicker, but some lenders charge you for overpayments.

Changes to your mortgage

You should inform your mortgage provider if anything changes so they can keep their records up to date or offer you help if you need it. Contact your lender if you need to:

Add a joint borrower

Change your name

Change the term of your mortgage

Update your contact details

Changes to the property

If you make any changes to your home that affect its value, you should let your lender know. This includes:

 Adding an extension

Building a conservatory

Converting a garage, attic or basement into a bedroom

If you decide to rent out all or part of the property, you need to tell your lender because you need their permission first.

Some mortgages’ terms and conditions will not let you do this, and some lenders will need you to change to a buy to let mortgage, especially if you will be moving out of the property.

Changes to your circumstances

Let your lender know when your personal circumstances change if it could affect your ability to pay your mortgage; for example:

You get divorced or break up with your joint mortgage holder

If one of the mortgage holders dies

You lose your job or go self employed

If you will struggle to make a payment

If you miss a mortgage payment, you may:

Have to pay a fee

Damage your credit record

Pay more interest

Take longer to pay off your mortgage

Lose your home in extreme circumstances

However, if you contact your lender before the payment is due, they may be able to help you. Here is what to do if you think you will miss a repayment.

How to pay off your mortgage

Your repayments will be calculated to clear your balance and all interest by the end of the mortgage’s term:

Keep making your repayments until then

Your lender will close your account

You will then fully own your home

If you want to pay it off early or switch it to another lender, you will need a redemption statement for your current mortgage.

Contact your lender to ask for a redemption statement, which will confirm the exact amount you need to pay to clear your mortgage balance, including fees like early repayment charges.

You can then pay this amount by bank transfer or cheque. If you are remortgaging, your new mortgage will pay off your old one instead.

How do joint mortgages work?

You could get a larger mortgage if you buy a home with someone else. Here is everything you need to know about joint mortgages whether you want to buy with your partner, another person or a group.

What is a joint mortgage?

You can buy a property with one or more other people by getting a mortgage in the names of both or all of you.

Everyone named on the mortgage is responsible for making repayments. You can decide between you how you share the equity in the property. This is the percentage of it that you own, which increases as you pay off more of the mortgage.

How much do joint mortgages cost?

They come with the same costs as standard mortgages, including interest and mortgage fees.

However, if you can save a higher deposit between you, this should give you a better choice of mortgages, so you could choose one with a lower interest rate than if you bought a property alone.

Source: punchng

13th AIHS: How CBN is providing Ease to Housing, Mortgages

Central Bank of Nigeria (CBN) Deputy Director and Head of Nigeria Housing Finance Program, Adedeji Adesemoye has revealed the several interventions by the apex financial institution in increasing home ownership in Nigeria through regulations, funding, mortgages, policy frameworks, partnerships and many more initiatives.

While speaking with Housing News at the 13th Abuja International Housing Show which took place from 23rd to 26th July 2019, Adesemoye said that the awareness about the importance of housing finance in Nigeria is growing and that there is an acknowledgement of what housing finance can do in changing the landscape of access to home ownership in Nigeria.

He said that the financial challenges that have hindered the progress of affordable housing in Nigeria are now being tackled effectively. The mitigating risks are now being reduced he said.

‘’The issues are being addressed in order for finance to flow into that aspect of our need as human beings and grow the market because after the need for food, the next most important need for man is shelter. And this is not just a social need, it is also an economic need. And when you look at it in a value chain approach, it creates jobs, it provides opportunities for the youths, it provides opportunities for the agent, and provide opportunity to measure whether you are succeeding in life.

‘’So everything about housing has a very high coefficient of economic growth and development in the real sector. It’s a whole environment itself that guarantees sustainability if it’s properly captured and the market is allowed to do its work, and if public sector funds can go into it to further expand its reach for those who needs to make effective demands,’’ he said.

On the contributions of CBN to ensuring affordable housing in Nigeria, he said that the contribution of the apex bank has been growing over the years. ‘’For the past five years, CBN accepted the responsibility of driving reforms at many levels of housing finance and was giving similar opportunity to manage an IVA facility that is aimed to catalyse the growth of housing sector in Nigeria.

‘’To bring it closer home, CBN supervises commercial and primary mortgage microfinance banks that have had various intervention in provision of housing funds across the landscape. So they need a supervisory framework that is robust to be able to do this. We need to have institutions that are well capitalised and well managed and supervised to be there tomorrow and give back the right confidence to the member of the public that they can satisfy their finance needs.

‘’CBN has moved further from being a regulator to implementing catalytic projects that have opened up the financial landscape. CBN managed the Nigeria Housing Finance project that just closed. It led to the birth of NMRC which is an opportunity of connecting this particular sector to the capital market where you have sustainable finance. It’s a refinancing company that refinances mortgages that have been created by the commercial and primary mortgage lenders.

‘’CBN have also taken the risk to be able to pay back to the world bank, to the IDA in putting together microfinance banks that are robust and give them opportunity to have international institution that build their capacity and create what we call housing microfinance which deals with incremental construction. 7 micro finance banks participated in this. They have gotten the seeds fund and the market has been opened. They are also being connected to another funding through the family homes funds.

‘’The second component of this is the fact that CBN is partnering with key partners in the industry like NMRC for the creation of Nigeria Mortgage Guarantee Company, which is addressing the creditor.

‘’In that particular program, also as part of the advocacy, CBN collaborated with the industry players including NMRC in developing the mortgage model and foreclosure act that focuses 0n providing enabling legal framework for states to be able to use the opportunity given to them in the constitution as trustees of the lands in the states.

‘’This is also to enable developers to have access to land. That enables mortgages that have been created to be foreclosed if it is not performing. That provides title to people who wants to build their home and use this particular land as a security to get mortgage in the financial institutions.

‘’We want the mortgage model and foreclosure act to go through legislative processes in the states to be passed into law. Today, they are active in states like Lagos, Kaduna, and Ogun, while it is on the way in many other states including Cross-River and Plateau.

‘’We will be working with the Nigeria Governors’ forum to see this is scaled up because for mortgage to thrive we need enabling legal framework that everybody will recognise. It will enable states to have electronic lands registry system and a working mortgage system, so that it will be easy to conduct searches and then when there is need for banks to realise the collateral for non-performing loans, it will be timely.

‘’We need to streamline all these approval processes. And the fee that is being spent needs to be at the rate than you can do business with,’’ he said.

The latest CBN intervention according to him is the mortgage interest drawback scheme which the CBN governor introduced to bring the current double digit interest rate on mortgages to a single digit. This, he said, is in collaboration with the bankers committee.

By Ojonugwa Felix Ugboja

NewRez and Shelter Mortgage Announce Formation of New Joint Venture Lender, Your Home Financial

Mortgage lender’s successful partnership with Russell Real Estate Services expands to offer comprehensive client services in Cleveland, Ohio.

NewRez LLC (“NewRez”), a national mortgage lender, announced today the formation of a new Joint Venture mortgage company to be added to its network of partners. NewRez and Shelter Mortgage Company, LLC (“Shelter Mortgage Company”), the NewRez business division focused on JV lending, have partnered in this venture with Russell Real Estate Services, a long-standing family-run business serving the greater Cleveland, OH area. The name of the new Joint Venture lender is Your Home Financial (“Your Home Financial”), and will be led by Paul McKelvey, currently an Area Sales Manager with NewRez.

The creation of Your Home Financial combines the expertise of some truly seasoned industry players in their respective lines of business. Russell Real Estate Services was founded in 1962 and has over 650 agents on its team today. Shelter Mortgage Company brings more than 30 years of experience in creating successful and profitable Joint Ventures to the partnership. Like all successful JVs, this one will offer buyers more options and services through a single source.

“At NewRez, we take great pride in our Joint Venture partnerships and only seek out those who we believe will make a positive impact on our respective businesses as well as the client and agent communities they serve,” says Randy VandenHoutenSVP, Joint Venture & Retail Lending, NewRez. “The Russell Real Estate Services team has demonstrated extraordinary leadership and we believe the partnership will exceed performance expectations in the mortgage space.”

“The innovative Joint Venture model offered by NewRez and Shelter Mortgage enables us to offer our clients a complete menu of mortgage services from an established platform and the credibility to achieve success in the mortgage business,” said Jeff Russell, COO Broker/Owner. “We look forward to expanding our services in the Cleveland area with Paul and his team, and making Your Home Financial a trusted resource for homeowners.”

About NewRez LLC

NewRez LLC (NewRez), formerly New Penn Financial, LLC, is a leading nationwide lender that focuses on offering a breadth of industry-leading products, supported by a loan process that blends both human interaction and the benefits of technology into an unparalleled customer experience. Founded in 2008 and licensed to lend in 49 states, NewRez is headquartered in Plymouth Meeting, Pennsylvania and operates multiple lending channels, including Correspondent Lending, Wholesale, Direct-to-Consumer, Retail, and a network of Joint Venture partners. NewRez is a Shellpoint Partners company and a member of the New Residential Investment Corp. family.

About Shelter Mortgage Company

Shelter Mortgage Company, LLC (Shelter) is a leading retail residential mortgage originator predominantly focused on conforming purchase money loans generated through relationships with realtors, builders, and relocation companies. Founded in 1984 as a subsidiary of a community bank, Shelter has loan officers across the country with over 25 joint venture and partner relationships in over 30 States. Shelter has built a strong platform via its differentiated, partnership-based origination model, focus on purchase money originations and compliance-oriented culture.

Source: Finance.yahoo

Boom in Refinancing Boosts Mortgage Lending

The mortgage market had one of its most significant quarters since the financial crisis as falling rates prompted a flurry of refinancing and an uptick in purchases.

The 30-year mortgage rate unexpectedly dropped to below 4% in May and has remained near its lowest level in three years, opening a window for borrowers who bought at higher rates to lower their payments and for purchasers to jump in.

With the Federal Reserve expected to lower short-term rates this week and the yield on the longer-term 10-year Treasury yield lingering just above 2%, the period of low rates stands to continue.

Falling rates are welcome news for lenders, but they mask a housing market that by some measures is cooling and remains vulnerable to a sudden updraft in rates. What’s more, home prices have continued to rise at a faster pace than median incomes, putting homeownership out of reach for more Americans.

Lenders made $565 billion of mortgage loans in the second quarter, the most in more than two years. At that pace, originations could exceed $2 trillion for only the third year since the financial crisis, according to Inside Mortgage Finance.

Banks including JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. -0.26% all reported higher mortgage originations.

There was also a lift for smaller independent lenders that have expanded their market share in recent years by shifting toward refinancing. They had struggled last year as rates rose, crimping the refinancing market.

“They are getting at least one bottle of Champagne out, if not the whole case,” said Guy Cecala, chief executive at Inside Mortgage Finance, an industry research group.

The last time mortgage originations passed $2 trillion was in 2016, when benchmark Treasury yields hit record lows. A similar boost occurred in 2012, a year in which rates hit what were record lows.

Refinancing accounted for roughly half of new mortgages, according to Mr. Cecala’s estimates, a boost from recent periods. In 2018, for example, when rates were rising, refinances accounted for just 31% of mortgage business. A one-point change in a mortgage rate can add—or subtract—hundreds of dollars from monthly payments.

Black Knight Inc., a mortgage-data and technology firm, recently estimated that there are 8.2 million U.S. homeowners who would qualify for and benefit from a refinancing. That is a 6.3 million increase from when rates peaked in November 2018.

Refinance applications rose 43% in the second quarter from a year earlier, while purchase applications climbed 6.2% during that period, according to the Mortgage Bankers Association.

John Hastings, a loan officer at Movement Mortgage in Minneapolis, saw a significant number of refinancings of Federal Housing Administration mortgages, which typically go to first-time homeowners. Some wanted to get lower rates, while others wanted to get out of the insurance that is required on those loans. He also saw more purchase business.

“Volume overall is definitely up from last year, that’s for sure,” Mr. Hastings said.

Since the financial crisis, mortgage lending has shifted away from the big banks and toward independent lenders, many with smaller balance sheets. Those firms, whose businesses are typically more dependent on refinancings, struggled last year and early this year as rates rose. A result was a wave of mergers and job cuts, as well as a handful of bankruptcies.

That trend reversed as rates fell. Quicken Loans, the largest nonbank mortgage lender, had its best quarter in its 34-year history from April to June. The company said that it closed $32 billion in mortgages.

The broad housing market is still showing signs of cooling as high home values price many out of the market. But the window of lower rates did provide an opening for some who had been wanting to buy.

Laura Poole, a database developer at an information technology company, began looking for a home earlier this year to benefit from rising housing values in the Dallas-Fort Worth area, where she lives. She closed on a three-bedroom, two-bathroom brick house in suburban Saginaw, Texas, in May.

Ms. Poole ended up with a rate of 4% on a 30-year fixed mortgage from Better.com, an online mortgage startup. Lower rates helped her have confidence that she would be able to stay within her budget, she said.

“I was so scared of being in a situation where I took on this house and then right away was having money worries,” Ms. Poole said. “So for me my biggest focus when purchasing a house was the projected monthly payment.”

Vishal Garg, founder and chief executive at Better.com, said the company made about $1 billion worth of loans in the second quarter, more than in all of 2016 and 2017 combined.

A Fed rate cut could spur renewed interest in home loans whose rates rise and fall with short-term rates.

In a typical adjustable-rate mortgage, borrowers pay a fixed rate for five, seven or 10 years, which is typically lower than the rate on a 30-year fixed-rate mortgage. After that, their rate generally resets.

Banks often favor these mortgages for high-dollar home loans made to wealthier borrowers. They were popular before the financial crisis but have mostly failed to regain popularity since.

Home-equity loans and lines of credit, which are also tied to short-term rates, may also increase in popularity if short-term rates fall.

“We do expect to see some uptick next month, assuming that there is a change in rates,” said Jon Giles, who oversees home equity products at TD Bank.

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