The Nigeria Mortgage Refinance Company has said that to address the housing deficit in the country, the problem of affordability must be tackled.
The Managing Director, NMRC, Prof. Charles Inyangete, stated that one of the most difficult things for an average Nigerian to achieve was building a house.
He said, “It is difficult to own a home in Nigeria because of the barriers that exist; they are such that before you own your own home, you have to pay in the region of 34.5 per cent in governor’s consent, bank charges and so on, on top of the 20 per cent you have to put down if you are taking mortgage, which makes the whole process unaffordable. So, even if you were looking to buying a N10m house, you have to find half the price to receive your keys.
“The Centre for Affordable Housing Finance in Africa says that for an organised developer to build a house in Nigeria, the cost comes to $28,000. So, it is estimated that only about 9.7 per cent of urban households in Nigeria can afford the cheapest house; so, what then is the hope of the young person looking to own a home?”
According to him, one of the most important things that any government can address is housing affordability.
“If we can make homeownership a reality in Nigeria, we will solve a great deal of our economic problems by creating a great deal of housing. We need to systematically address these problems. Homeownership will not take off until we have addressed the issue of affordability. We should help those who want to own a home to step on the escalator and move up to the point of homeownership,” Inyangete stated.
He said one of the key components that must be addressed was housing policy for first time homeowners.
“In most parts of the world, the first time homeowner is supported to own such a home,” he added.
Inyangete, however, stated that the process of making homeownership affordable had kicked off with the establishment of the NMRC, developed to deepen the country’s primary and secondary mortgage markets for increased home ownership by Nigerians.
The NHFP, he said was set up by the Federal Government and was being implemented by Central Bank of Nigeria with the World Bank’s International Development Association loan.
“The NMRC’s key role is to make homeownership a reality through providing funds for mortgage lenders so they can make mortgages a reality for lenders,” he added.
A board member of the NMRC and the Managing Director of Homebase Mortgage Bank Limited, Dr. Femi Johnson, said stakeholders were working to create an enabling environment for housing finance so that a lot of people could own their own homes and also ensure that houses were available at the right prices, while making mortgages available at the right interest rates and tenor with issues of title transfers, foreclosures and the rights of tenants protected.
According to him, one of the steps being taken is the ‘My Own Home’ scheme being actualised through the NMRC, mortgage guarantee/insurance scheme and housing microfinance scheme components of the Nigeria Housing Finance Programme.
Johnson explained, “The first aspect of the scheme is mortgage where the NMRC plays a very active role; the second is the mortgage guarantee scheme, which is about to be launched by the Central Bank of Nigeria; it is essentially an insurance, which allows people without the minimum 20 per cent contribution to contribute five per cent and get a loan of up to 95 per cent. It is an innovative tool that is being used in other climes.
“The other is the housing microfinance for people at the end of the ladder and is anchored by microfinance banks. It is for incremental building. ‘My Own Home’ is like an enlightenment scheme to educate people and help them understand what is available, their rights and responsibilities and all the things being done in the mortgage industry to ease the process of homeownership.”
He noted that there had been increased confidence in the mortgage industry through the various initiatives by stakeholders.
“Before the NMRC, the longest loan we gave was for five years even if usually our loans were for two years; but now, we give 20-year loan as a standard and what it means is that people are not under pressure to repay so much, they can spread their repayment over a long period and more people can now afford it. The NMRC takes bonds from the market for 15 years and we lend for 20 years and such mortgages are very prevalent in the market today,” he added.
According to Iyangete, if construction of affordable homes and the funding that will allow the realisation of cheaper mortgages to be created are encouraged, the country will be on its way to ending its housing crisis.