Owning a home is a capital-intensive venture. A combination of low wages and high living costs limits the capacity of millions of Nigerians to save towards building or purchasing a house of their own.
The result is a huge housing deficit estimated to range between 17 and 22 million housing units.
Globally, countries promote the widespread adoption of mortgages to increase access to housing. Mortgages provide an affordable path to homeownership because beneficiaries can own their homes and pay over extended periods of up to twenty years. That is why in countries such as the United States, Canada, United Kingdom etc, mortgage loans account for most houses that people own.
The reverse is the case in Nigeria. Outright home purchase or self-financing accounts for the majority of homes. It is because of this that the role of the Federal Mortgage Bank of Nigeria (FMBN) in promoting mortgage adoption in Nigeria is so significant.
Established as a wholesale mortgage finance institution, the FMBN provides primary mortgage banks with low-cost funds to provide affordable mortgages to Nigerian workers.
FMBN’s housing products are available to Nigerians who register and contribute 2.5 percent of their monthly incomes to the National Housing Fund (NHF) Scheme.
A good example is the NHF Mortgage Loan that allows eligible contributors to the National Housing Fund (NHF) Scheme to access loans of N15million to own their homes. The loan is payable over 30 years – depending on age and years in service – at a single-digit interest rate of seven percent
A registered contributor can apply for a home loan after six months of consecutive contributions to the NHF scheme.
Over the past four years, the Arc. Ahmed Musa Dangiwa-led FMBN Management provided NHF Mortgage loans totaling over N52.3billion to 5,774 Nigerians thus helping them to make their dreams of homeownership a reality.
Besides the NHF Mortgage Loan, FMBN has developed two innovative housing products to ensure a match with the financial capacity of the average Nigerian worker.
First is the individual Home Construction Loan. The loan provides up to N15million at a 7 percent interest rate to NHF contributors who have unencumbered land, appropriate titles, and approved building plans to undertake self-construction. Beneficiaries can pay back over 30-years, depending on their age and number of years left in service.
Another is the FMBN Rent-To-Own Housing Scheme. The scheme makes it possible for beneficiaries to move into an FMBN-owned housing property as a tenant and pay towards ownership of the property in monthly or annual installments for periods of up to 30 years at an interest rate of 7%!
The home renovation loan is another equally affordable home product that FMBN has upscaled within the past three years. The loan provides up to N1million to beneficiaries who already own their homes to carry out improvements.
Since the current FMBN Management Team came into office in 2017, the Bank has processed and disbursed home renovation loans totaling over N61.4billion to over 75,455 Nigerians.
FMBN’s drive to leverage mortgages as a convenient means to affordable homeownership is good for the country and its citizens. For Nigeria to sustainably tackle the increasingly worrisome housing deficit, there is a need to increase mortgage penetration levels, especially within the low-medium income segments of the economy. An excellent place to start is for the government to deepen the financial resilience of the FMBN to scale its operations and make homes available to the over five million subscribers to the National Housing Fund Scheme.