Bad structure, not capital base seen as mortgage industry’s ...

oped 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 quarteron-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 recom