The high cost of obtaining mortgages in Nigeria has been attributed majorly to the cumbersome procedures and cost of obtaining Certificate of Occupancy from State governments. Managing Director of Infinity Trust Mortgage Bank Plc, Mr Olabanjo Obaleye, disclosed this in an interview with Vanguard at the bank’s 10th Annual General Meeting (AGM) in Abuja.
Speaking on the difficulties mortgage banks encounter when dealing with state governments, especially in obtaining documentation for housing projects, he noted that the difficulties contribute largely to the high interest rates being charged by banks on mortgage and real estate in the country.
“Most state governments believe that land is their natural resource and they have to sit tight on it as 35 percent of land in the country is owned by states government. It takes an upward of five or more years to get Certificate of Occupancy (C of O) for landed property. But if the governments make those facilities less expensive and affordable, more people will voluntarily pay for mortgages.
Most people are not paying their tenement rates because government is not providing any service for them to be able to persuade them to pay. The way forward is for the federal government to relax some of the land acquisition procedures and make it accessible to bridge the 17 million housing deficit. The operating environment is very hostile especially to mortgage banks. You can see that in the last two years some mortgage banks have converted to commercial banks just because the operating environment is very stiff,” he stated.
On the contribution of the mortgage sector to the country’s Gross Domestic Product (GDP), he said: “Mortgage banks in other countries contribute over 60 percent of their countries’ GDP but in Nigeria, we contribute about 4 to 5 percent and the government is not doing anything about it. Government has to tinker on their policies framework to ensure that the mortgage sector contributes meaningfully to the economy of this nation.
Without the mortgage sector, it will be difficult for Nigerians to move forward at the rate we are going now.” He added that the high interest rates charged by banks on mortgage and real estate have hampered the delivery of affordable housing in the country.