Skip to main content

How to create robust mortgage industry

Provision of decent and affordable housing in Nigeria has become a daunting task for both governments and private sector. This is because even when government admitted its lack of capacity to provide housing and introduced what it termed Public Private Partnership (PPP) in the sector to shelter the teeming population, it has remained an Herculean task with no solutions in sight. Although this challenge is not exclusive to Nigeria, other countries world over have devised means of curtailing their own problem while Nigeria still lives in the euphoria of being the largest economy in Africa and one of the fastest growing in the world.

But experts have argued that the establishment of vibrant mortgage industry would help those who do not have the resources to finance their own housing. This means that people can borrow money from any mortgage facility or seek the services of builders or developers in the country. Mortgage could therefore be explained to mean a loan given to an individual or a couple to purchase/own a home without paying for the property upfront, while using the same property as collateral for the loan. The mortgagor who is the loan receiver is usually required to make an equity contribution of about 20 per cent, which is called down payment.

The primacy of the housing question had spurred the United Nations to promote the programme of housing for all by the year 2000 even though UN failed at the initial stage to study the challenges facing housing deficits in various countries. This is why good quality housing, as a basic need, is lacking for a sizeable number of Nigerians. It is such that the medium and low income segments of the population, most of whom live in urban centres, suffer severe housing crisis.

The World Bank, in a recent publication, estimated that the cost of bridging Nigeria’s 23 million housing deficit is N65.5 trillion, underlining the vast and untapped investment potential of the country’s real estate sector.

This housing problem has lived with us since time immemorial that in November 2013, the then President, Goodluck Jonathan, admitted that Nigeria had housing deficit and that the country needed a minimum of N56 trillion to bridge the country’s 17 million housing deficit postulated by the World Bank then. This figure is, however, not too far from the estimates of the Federal Mortgage Bank of Nigeria (FMBN), which stated then that it would take about N56 trillion to adequately meet the housing needs of Nigerians with the figure based on a conservative cost of construction at N3.5 million per unit.

It is an obvious fact that fundamentally, the nation needs more than 20 million housing units to bridge the housing deficits in the country, and providing these houses will cost more than N56 trillion at a conservative cost of N3.5 million per unit. This, however, is a colossal amount which cannot be funded only through the National Housing Fund (NHF) but requires urgent injection of funds from both the government and the private sector.

However, experts have identified that the Land Use Act, which resides ownership of land in state governors, and a cumbersome property registration process are major barriers to housing development and home-ownership leading to the country’s huge housing deficit. The experts believe that until the Act is reviewed or amended, improved housing development would continue to remain a pipe-dream. Real estate and financial experts who agree with the World Bank’s submission also explained that the real estate sector remains a viable option for investors seeking guaranteed returns on investments, saying that several opportunities exist in the sector.

In all these, a lot of challenges have bedevilled the system bringing it to a non-workability status. The appropriate quarter in charge of the mortgage facility has not done enough to create awareness to the public that such facilities exist. The high rates charged by domestic financial institutions always discourage would-be participants. Again, the lack of capacity by mortgage institutions and mortgagors try to pull down the facility resulting in difficulty in obtaining, perfecting and transferring title documents. The Land Use Act has also remained a stump in the process with mortgagors not being sure of the next action of the mortgage.

There is also the legal charges that are not streamlined coupled with the dearth of long-term commercial mortgage facilities. The mortgagors also see the low interest rate on NHF investment with limited sources of fund supply as discouraging factors. In this regard, whether you are going to access mortgage via home purchase mortgage, refinanced mortgage, equity release mortgage, buy-to-let bases or land purchase mortgage, the most challenging factors are the way and manner the public sees it. For the public to change their already entrenched perception of mortgage facility, a series of campaign and promotion is expected to create the necessary awareness.

In the estimation of the World Bank, some of the numerous opportunities available in the sector include private equity players who are capable of making big investments; financial institutions that can float real estate funds and pension regulators who can build a robust framework for real estate funds investment. Other opportunities enumerated by the World Bank are the adaptive re-use of properties by banks in the form of converting properties and taking stakes in new deals. Opportunities for hotels, events and recreational centres, shopping malls, estates, among others, are also available.


Popular posts from this blog

Is Davido A Member Of The Black Axe Secret Cult? Check Out What His Manager Is Saying

Asa Asika, Davido’s country manager,  has rubbished a controversial report which went viral last week that one Tobi Adegoke, a 25-year-old suspected member of the Black Axe cult was lured into becoming a member of the group with promises that joining the group would grant him the rare opportunity of meeting Davido, Vanguard reports. According to the suspect, a budding musician who is currently in police custody after being arrested and paraded alongside 26-other suspected cultists by the Lagos State Police Command last week Wednesday; he fell for the cheap trick because he believed meeting Davido would boost his music career.  “I am an Aiye member (Black Axe). I have been in the cult for about two years. I was told that Davido was a member and if I joined, I will be able to meet him. It was the guy who initiated me that said so. He said he worked for Davido and that it will be easy access for me. But since I joined, I have not met Davido. They told me I’ll become a very popular musici…

Marriage: A school of learning, discovery

By Pastor Okokon Ating I have been enlightened that marriage is an insti-tution established by God which no student has gra-duated from. Once an in-dividual is able to obtain admission into this sch-ool, one keeps on learning till death. In the school of marriage every student is a novice. No matter how highly educated one is, he/she has a blank knowledge compared with the normal academic attainment.                                                   wedding ring
There are many mysteries embedded in marriage unknown to the unlearned heart. Couples do not know marriage but learn and study it. That is, cou-ples learn and study it when they come into the practical aspect of it. I came in contact with a young lady who was busy attending marriage semin-ars and reading several books on marriage. Atten-ding seminars and reading books on marriage are good, I told her; but where you can know and be pr-oud of living confidently in marriage is when you enter into the reality of marriage. This is w…

Save The Planet, Preserve The Ozone Layer

Everything you need to live well
The activities done by man to make life easier has depleted the ozone layer and endangered Planet earth due to pollution. Planet Earth has indicated through global warming the most visible sign of climate change. According to the United Nations Environment Programme (UNEP), over the last century, sea levels have risen by between 10 and 25 centimeters, and carbon dioxide—the main cause of the greenhouse effect—is responsible for 85% of the increase in the Earth’s temperature over the last 10 years. To stop this negative effect and preserve the ozone layer, here are a few ways to check air pollution; Prevent bush burning In some rural areas bush burning is an easy way to prepare farmlands for cultivation. This is not only harmful to the soil but also the planet as well. Take precautions to avoid starting fires especially during the dry season. Buy organic products. Go for eco-friendly products that have no effec…