Providing roadmap for housing finance in coronavirus era
At a time when the entire world is contending with health challenge with terrible economic impact on individuals, households and organizations, very little consideration is given to housing, especially housing finance and/or mortgage.
With the lockdown and restriction of movement, economic activities, including construction, were put on hold, leading to a significant contraction and loss of income.
Only recently, the minister of finance, budget and economic planning, Zainab Ahmed, expressed fear of Nigeria relapsing into recession,once again. That, from the nation’s micro and macroeconomic outlook, especially rising inflation, seems inevitable.
It was against this backdrop that leading housing financing institutions in the country, who spoke at an online conference hosted by Housing Development Advocacy Network (HDAN) in Abuja, were agreed on providing a clear roadmap for housing finance in the country during and post-covid-19 era.
These institutions were Federal Mortgage Bank of Nigeria (FMBN); Family Home Funds (FHF); Nigeria Mortgage Refinance Company (NMRC); and Central Bank of Nigeria (CBN), and Mortgage Bankers Association of Nigeria (MBAN) which is an umbrella association of mortgage banks in the country.
These institutions, which were represented by their chief executives and president respectively, were of the view that rejuvenating housing construction activities would help in creating jobs, generating income, opening up businesses, and promoting economic growth and development.
“The CBN is working on mortgage interest drawback programme to reduce interest rate to single digit for mortgages not exceeding N5million apart from other interventions,” revealed Ade Adesemoye, a Deputy Director at CBN, who also doubles as Director at FMBN.
The apex bank has made interventions in the Nigerian housing sector, especially the launching of the Mortgage Guarantee programme which seeks to improve mortgage access by low income earners through a third party that serves as a guarantor to the mortgagor.
Adesemoye affirmed that CBN was committed to creating an intervention fund for three critical areas of the housing sector, including the provision of construction finance for developers that can provide evidence of profiled off-takers with ability to repay.
Others are the provision of mortgage finance to avail funding for mortgage originator; and working with state land administration agencies to process and issue titles promptly. The bank also plans to implement friendly foreclosure laws and reduce cost of land documentation.
“Considering the whole housing sector in itself, there is a lot of developmental approaches in terms of job creation, skill development and home ownership,” the deputy director noted.
Determined to implement its mandate of producing 500,000 houses and creating 1.5 million jobs by 2023, Femi Adewole, Managing Director of FHF, said the Fund’s Rental Housing initiative was designed to enable people on the bottom of the housing ladder to enter a home of their choice and in the location of their choice with very minimal capital commitment.
FHF has some innovative products that are also meant to ease access to homeownership. One of such products, Adewole revealed, is the Help-to-own and installment payment plans.
To realize full potential of these products, Adewole said the Fund has been working with agencies like the Nigerian Building and Road Research Institute (NBRRI) and other major manufacturers of building materials like cement to look at what they could do to ensure that by 2021, at least, 35 percent of building inputs are locally manufactured.