Hope for low interest mortgage and affordable housing is creeping into the property market as the Nigerian Mortgage Refinance Company (NMRC) gets set to return to the capital market to issue fresh bond that will enable it to raise N20 billion for increased liquidity in the mortgage market.
NMRC had earlier visited the capital market from where it raised N8 billion with which it refinanced mortgages originated by six mortgage institutions including Stanbic IBTC, Imperial Homes, Sterling Bank, Sun Trust Mortgage Bank, Trustbond Mortgage Bank, and Homebase Mortgage Bank which got N1.8 billion, N1.7 billion, N1.6 billion, N1.3 billion, N700 million and N500 million respectively.
Nigeria is known to have over 17 million housing units deficit, requiring about N59.50 trillion to close. This deficit, according to experts, is traceable to lack of mortgage access such that houses are built through own savings which fuels temptation for corrupt practices as many who want to save legitimately take a life time to save, yet cannot afford to buy or build houses.
Launched a couple of years ago, NMRC is a private sector-driven company with the public purpose of developing the primary and secondary mortgage markets by raising long‐term funds from the domestic capital market as well as foreign markets for providing accessible and affordable housing in Nigeria.
It is, arguably, one of Nigeria’s first successful partnerships between the private financial sector and the public sector with a mission to break down barriers to home ownership by providing liquidity, affordability, accessibility and stability to the housing market in Nigeria.
Expectation is high that when the company raises the N20 billion by the first quarter of 2017, more mortgage institutions, especially the primary mortgage banks (PMBs), will be refinanced and more mortgage applicants will be able to access mortgage to buy or build their homes.
Many of the PMBs could not access the first capital raised (N8 billion) by the refinance company because of the high interest rate. “We are hoping that when NMRC raises another capital, it will come at lower interest rate and PMBs will be able to access the funds at lower interest rate, if not at single digit, at least, at lower double digit”, explained Femi Johnson, MD/CEO, Homebase Mortgage in an interview.
Johnson who is also a director at NMRC and the President of Mortgage Banking Association of Nigeria (MBAN) explained further that it is taking the company this long to return to the capital market because the Securities and Exchange Commission (SEC) requires it to have expended about 70 percent of the earlier capital before returning to raise more.
High interest rate has been the bane of mortgage access for home ownership in Nigeria as many mortgage applicants and home seekers cannot afford the commercial interest rate of between 20 percent and 25 percent charged on mortgage loans with very short repayment period.
NMRC was, therefore, set up with sole purpose of addressing this abnormal situation. The role the company is expected to play in this direction, according to Charles Inyangete, MD/CEO, is to provide liquidity for the mortgage market, improve affordability – reduce mortgage rates, extend mortgage terms, lower deposits, enhance standardization of aspects of the market, introduce new products, accelerate the creation of new mortgages, and catalyse affordable housing delivery for Nigerians.
Consistent with its mandate to promote wider spread of home ownership, accessibility and affordability in Nigeria, the NMRC has set up what the CEO called ‘Housing/Mortgage Market Information Portal (MMIP)’ to enable it to gather data for intelligence and profiling of federal, states civil servants and informal sectors (off-takers) for affordable housing.
“This is an effective policy and decision making tool on land allocation, infrastructure and concessions; it enables decision on creating polycentric cities in order to decongest major urban centres”, he disclosed, adding that pilot implementation of the initiative was already taking place in six cities including Abuja, Lagos, Kano, Bauchi, Enugu, Port Harcourt.
Another initiative the company has come up with is the Mortgage Market System (MMS) which is a transformational change that integrates the entire housing market, covering construction finance, primary and secondary mortgage. The system which is available to all players in the housing industry has the benefit of removing duplications of effort in gathering data and documents; improving the turnaround time, reducing the cycle time of transactions and helping in making homes more affordable.
It is hoped that the use of the system for federal and state governments mortgage asset registry will reduces cost of homeownership; eliminates breaks in the chain of title; improve hard naira savings on each loan for homeowners and lenders, and reveal identity of servicer and investor available for free to homeowners via phone or internet.