Single-digit mortgage rate: Stakeholders urge economic fix first
Forthesingle-digitmortgage rate to become an effective tool in the push for more available housing funds, the Mortgage Banking Association of Nigeria (MBAN) has urged the government to embark on critical economic fix first. This, the association believes, will pave way for the realisation of the single interest rate for mortgage funds.
Kayode Omotosho, MBAN’S CEO, says mortgage rate is in double-digit because it is largely determined by economic conditions, speaking during the August editionofrealestateinvestorseries (REIS) themed “Financing Home Ownership: A Focus on Mortgages and Housing Funds as Veritable Platforms.
He states there is the need for
multiple housing vehicles since the National Housing Fund (NHF) loans were insufficient to meet Nigeria’s housing need.
“Market condition is what determines interest. We are mindful that double-digit rate on mortgage is not the best. We are in talks with thecentralbankofnigeria,buteconomic issues have to be addressed for mortgage rate to fall back to a single digit,” Omotosho notes.
Highmortgagerate,whichcontinues to deny many Nigerians the privilegeofowningahome,portrays the weak economic fundamentals of Africa’s most populous nation.
This even casts a pall on the country’sabilitytobridgeitsestimated 17 million housing unit shortfall and provide affordable houses to low-income earners, which forms the bulk of Nigerian populace.
In advanced economies, the mortgage industry contributes significantly to economic developmentwithasingledigitinterestrate.
However,thereverseisthecase in Nigeria, where relatively high inflation rate and its attendant high mortgage rates hurt demand for housing.
Nigeria roughly needs about 750,000 units to meet its housing deficit. And this is a herculean task for a country stuck with low growth after the recent recession, even as limited access to funds dampens the performance of mortgage industry.
On its part, the MBAN has committed to improving funding sources for housing projects registration of nine mortgage brokerage companies, creation of mortgage defaultlossofjobinsurancescheme as well as collateral replacement indemnity scheme.