Mortgage: More govt interventions needed to change industry story

So far, the mortgage industry story in Nigeria has remained the same, several years after, despite government’s interventions in that industry and also in the housing sector, all aimed to make housing in the country affordable.

The present state of the mortgage industry and the housing sector worries stakeholders who had expected that after setting up of the Federal Mortgage Bank of Nigeria (FMBN), the National Housing Fund (NHF) and the Nigerianmortgagerefinancecompany (NMRC), there would be a new beginning.

NMRC’S mission ‘to break down barriers to home ownership by providing liquidity, affordability, accessibility and stability to the housing market’ is yet to be realized appreciably due to unfriendly business environment.

In addition to these, there have been other initiatives such as the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority (NSIA) which created the Family Homes Fund (FHF) and voted N1 trillion for affordable housing for Nigerians with potential capacity to generate up to1.5 percent increase in GDP by 2023.

This was followed by the Federal Integrated Staff Housing (FISH) programme of the federal civil service to enhance affordable mass housing delivery just as the Mortgage Warehouse Funding Limited (MWFL) also came on board as a special purpose vehicle to provide short term funding for financing primary mortgage originations.

It is sad to note that, in spite of these interventions, both mortgage and housing are still struggling. Nigeria is expected to produce 1million housing units annually to bridge its housing deficit, but the annual production is estimated at 100,000 units.

NMRC, a couple of years ago, announced that it has refinanced mortgage loans totaling N18billion as at December 2018 which, it explained, was in line with its mandate to promote affordable home ownership in the country by leveraging funding from the capital market to deepen liquidity in the primary and secondary mortgage markets.

“The deployment of the N18billion to refinance mortgage loan portfolios of member-lending institutions has helped to boost liquidity in the Nigerian housing market, thus enabling mortgage lenders to provide more housing loans and encouraging long-term mortgage loan creation”, the company said in a statement in Lagos.

But it remains to be seen where and how this deployment has impacted on either housing delivery or homeownership. It may not be safe to say that people have not bought or built homes as a result of this “deployment”, but the number may not be something to tell a tale, considering the need and the gap.

Experts are, therefore, saying that there are problems with the country’s mortgage industry which, in their view, are fundamental. One of such problems is accessibility and the second is clarity. Accessibility is a big issue because when a borrower approaches a mortgage bank for loan, the bank will begin to ask for things that he cannot provide. And these are things he cannot really provide in his life, meaning that, for such a person, mortgage is not accessible.

In terms of clarity, there is no unified system. Paul Onwuanibe, CEO, Landmark Group, says there is no where government has published a mortgage rate which the mortgage banks have to buy into or a mortgage standard or process which the banks have to fit into.

“I don’t really know. It is obvious that there is no clarity in the mortgage system here and if there is any such thing, it is not yet published and so people don’t know and if people don’t know, it means such a process does not exist”, he posited.

Besides accessibility and clarity, there is also the problem of interest rate which is hard to take because a borrower with low income cannot take a long term mortgage loan with double interest rate. It is simply not viable. This is because if the loan seeker borrows at 20 percent rate, it means that every year, he owes