By Mashe Umaru Gwamna
For the country to attain housing sufficiency, there is the need for the construction of affordable houses and access to adequate funding that will make cheaper mortgages possible. This is because affordability is critical in the quest of citizens to own personal homes with mortgage market.
The difficulty in housing affordability, which boils down to financial capacity, has been further accentuated by the Centre for Affordable Housing Finance in Africa (CAHFA). The body noted that for an organised developer to build a house in Nigeria, the cost comes to $28,000 or N10.08 million (at N360/$1). This means that only about 9.7 per cent of urban households in the country can afford the cheapest house.
The Managing Director, Nigeria Mortgage Refinance Company (NMRC), Prof. Charles Inyangete, agreed. He explained that the situation has been compounded because of the barriers in the housing sector.
“They are such that before you own your own home, you have to pay in the region of 34.5 per cent in Governor’s Consent, bank charges and so on. This is aside the 20 per cent you have to deposit if you are taking mortgage, which makes the whole process unaffordable. So, even if you were looking to buying a N10 million house, you have to find half the price to receive your keys because of these charges,” he said, adding that this has made home ownership one of the most difficult things for an average Nigerian to achieve; hence, the need to tackle the problem of affordability.
According to the NMRC boss, one of the key components that must be addressed is housing policy for first-time homeowners, which is the norm in developed countries, where first-time homeowner are supported.
He is convinced that if easy homeownership becomes a reality in Nigeria, a great deal of the country’s economic problems would have been solved.
“We need to systematically address these problems. Homeownership will not take off until we have addressed the issue of affordability. We should help those who want to own a home to step on the escalator and move up to the point of homeownership,” he admonished.
Inyangete, who spoke to a select team of real estate reporters in Lagos, however, disclosed that with the establishment of the NMRC in January 2014, to deepen the primary and secondary mortgage markets for increased homeownership by Nigerians, the process of making homeownership affordable had kicked off. “The NMRC’s key role is to make homeownership a reality through providing funds for mortgage lenders so they can make mortgages a reality for lenders,” he added.
Yet, the Nigeria Housing Finance Programme (NHFP) represents another initiative at making home- ownership affordable. Through the NHFP, initiated by the Federal Government and being implemented by the Central Bank of Nigeria (CBN), with the World Bank’s International Development Association loan, mortgage financing will receive a boost.
The Managing Director, Homebase Mortgage Bank Limited, Dr. Femi Johnson, said stakeholders in the housing and mortgage industry were working assiduously to create an enabling environment for housing finance; this is to ensure that more people are able to own homes with ease of financing and also ensure that houses were available at the right prices. This effort is also inclusive of making mortgages available at the right interest rates and tenor, with issues of title transfers, foreclosures and the rights of tenants protected.
Johnson, who is also a Board member of the NMRC, said another of such laudable steps that has been taken to actualise this dream is the My Own Home scheme. The initiative is being executed through the NMRC, mortgage guarantee/insurance scheme and housing microfinance scheme components of the NHFP.
Giving further explanation on the scheme and how it works, Johnson narrated: “The first aspect of the scheme is mortgage where the NMRC plays a very active role; the second is the mortgage guarantee scheme, which is about to be launched by the CBN. This stage is essentially an insurance, which allows people that cannot afford the minimum 20 per cent equity contribution for mortgage to contribute five per cent and get a loan of up to 95 per cent. It is an innovative tool that is being used in other climes’’.
He further explained that the other aspect, which is anchored by microfinance banks, is that of the housing microfinance for people at the end of the ladder. This category is for building incrementally.
And the scheme seems headed for success. “Before the NMRC, the longest loan we gave was for five years even if usually our loans were for two years; but now, we give 20-year loan as a standard and what it means is that people are not under so much pressure to repay; they can spread their repayment over a long period and more people can now afford it. The NMRC takes bond from the mortgage market for 15 years and we lend for 20 years and such mortgages are very prevalent in the market today,” Johnson explained. These initiatives, Johnson believes, have led to an increased confidence in the mortgage industry.