We see changes in mortgage financing, but macro-problems remain—MBAN

The leadership of Mortgage Bankers Association of Nigeria (MBAN) says things are happening that are bringing changes in mortgage financing in Nigeria, noting that these changes are impacting positively on the country’s housing sector.

They point out, however, that macro-economic problems, notably, inflation and interest rates remain, exerting pressure and limiting the full realization of the sector’s growth potential.

Nigeria has been grappling with a galloping inflation that once peaked at 34.80 percent. This was made worse by the removal of petrol subsidy by the President Bola Tinubu administration, pushing commodity prices to levels never seen before in the country.

Interest rate also climbed progressively as the Central Bank deployed stringent monetary polices to tame inflation with little or no positive outcome in the short-term. Whether the story is about mortgage or commercial loans, the interest rate was high, dangling between 27 and 30 percent for short-tenured loans.

“But things seem to be slowing down a bit. Inflation is going down. And rates are also going down,” Ayo Olowookere, president of MBAN, noted recently during a courtesy visit to the BusinessDay Head Office in Ikoyi, Lagos.

He however projected two to three years before rates get back to 2022 levels, noting that on the long-term financing and low-rate side, the federal government is actually doing a lot.

“We had a federal mortgage bank of Nigeria (FMBN)-supervised National Housing Fund (NHF) that gave loans at 6 percent which did not make much impact because the maximum loan you could do was N15 million,” Olowookere recalled.

Today, you have the Family Homes Fund created by the federal government and funded by the African Development Bank (AfDB). There’s a sovereign guarantee of the federal government behind it.

“There is the Ministry of Finance Incorporated (MOFI) Real Estate Fund (MREIF). It is a N1.5 trillion real estate investment fund managed by ARM Managers. Currently they’re holding N250 billion, comprising N150 billion from the government and N100 billion from pension funds.

So, they give the money out to mortgage banks at 9 percent interest rate while the mortgage banks give it out at 12 percent. So, we now have a 12 percent mortgage with 20 years repayment tenor,” Olowookere disclosed.

He noted that though a lot of things are happening, what is not happening is coordination and putting the information out the right way, adding that as a mortgage banking association, they are a market mediation association whose job is advocacy.

They advocate in a way to push those having these funds to do things the right way—be more aggressive and more proactive because, if not, they will sit down with the money.

“Before they started disbursing MREIF, the money has been with them since November. The NHF fund has been there. The Family Home Funds have been there. So, our plan is to work with all these agencies of governments so as to have focus and a sense of direction,” he said.

He pointed out the advantage of taking an MREIF loan, saying, “for a mortgage of N30 million for 12 years, your monthly repayment is as low as 280,000. So over 15 years, you have up to N200,000 differential monthly repayments.”

He disclosed that MBAN is planning a Roundtable and the purpose is to bring the critical stakeholders to the table. It’s not a conference; it’s not a summit. “We have listed just three critical stakeholders, including the ministries of Finance, Housing, and Trade and Investment. We have approached them and they are interested in coming to the table.

Other stakeholders are the CBN, FMBN, NMRC. MREIF, Family Home Funds, Federal Housing Authority, REDAN. And PENCOM and our media partners,” he said.