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Revolutionising Nigeria’s Mortgage Sector Towards Home Ownership


Despite the fact that mortgage system that had been in operation in the country for many years, the fact that its impact has not been felt in the nation’s mass housing scheme shows that a more pragmatic strategy must be adopted to bridge the huge housing deficit in the country.

Available statistics shows that mortgage financing had been in the countryfor quite a while, with the establishment of the Federal Mortgage Bank of Nigeria (FMBN) in 1956, however, its impact has not been felt in the sector compared to what obtains in advanced countries.

Despite the institution’s longevity in the country, the demand for owing personal houses has not been matched by supply because there are no financially strengthened mortgage outfits that could provide robust facility that will help prospective homeowners to key into the process of ownership.
Presently in the country, accessing funds to build houses is very difficult due to the near-absence of a functional mortgage sector.

The Primary Mortgage Institutions (PMIs), till date, lend to their clients at a very high interest rate in addition to asking for deposits which negate the quest for a virile mortgage sector that would aid house ownership.

Experts feel that that the country continues to lag behind in socio–economic development indicators even in the mortgage sector because of its ineffectiveness in utilizing its potentialities to transform the economy and improve on the well-being of its citizens.

According to Akin Olawore , a frontline realtor, “What we have right now is a situation whereby the developer has to do infrastructure, he has to put things on the ground; if he goes to the bank; the bank will say bring collateral and bring committed off takers, so that the bank can be sure they will get their money back.
 “Interest rates at a very high rate, the problem of access to long term fund for housing must be addressed. Right now you have people, who are working, earning salary and paying rents; paying rents that if we structure mortgage properly, their rent is higher than mortgage.

“If you structure 20-25 years mortgage at 7-8 percent – which is even still higher anyway. The rent Nigerians are paying right now is more than enough of what they need to service their mortgage and own the house. There is also the problem of building materials and all that which should be tackled.

The managing director of Realty Point Limited, a real estate giant, Mr Debo Adejana said,“ Access to mortgage provision helps affordability a great deal especially when the cost and tenure of finance are very competitive.
“The interest rate/charges payable on a mortgage and the tenure of the loan are critical elements of affordability.”
He reasoned that, the lower the rate and the longer the tenure, the more affordable the house type because it means more people will be able to take and repay such loans based on their current earning since constitutionally, individuals are not allowed to spend more than about 30 percent of their earnings on housing.


(culled from

October 21, 2014

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