Despite Nigeria’s teeming population, the nation’s Mortgage Sector is still far from achieving it’s full potentials to bridge the housing unit shortfall in the real estate sector. The Nigerian Mortgage system needs a total overhauling to overcome the prevailing obstacles of housing deficits in the country.

Without mincing words, the Nigeria real estate market will continue to struggle without results until urgent steps are taken to address the key concerned areas that has been plaguing a sector which has the capacity to change the fortunes and narratives of the Nigerian economy.

Over the years, mortgage operators have canvassed for bailouts of the sector by the federal government than the government creating the enabling environment for the sector to grow. Issues of high interest rate, long and costly titling process, the Land Use Act don’t get much attention and these are the major challenges that needs the sector needs to address to plug back the leakages in the sector.

Nigeria has a staggering housing deficit stock of over 20 million housing units shortfall and the cause of the gap is traceable to identified problems in the mortgage industry which in turn are the causes of the slow Implementation of housing projects in the industry which the sector has suffered over the years.

Indeed, mortgage in the country lacks clarity. It is inaccessible and unaffordable. When Nigeria who actually need mortgage to buy or build houses approach the PMBs for loans, they are always asked to provide things they don’t have, meaning that mortgage is not accessible for those that actually need it.

It is not hard to see that there is no clarity in the industry as affordability, which has to do with interest rate on mortgage loan, stands tall between the borrower and the loan. Many Nigerians hold the view that there is no mortgage in Nigeria because it is difficult most times, to distinguish between commercial from Mortgage loans. Added to this, mortgage loans in Nigeria are usually short term as against long term in other jurisdictions.

This, in our view, is a major problem because housing development for instance, is a long term project and it is not viable and neither does it make economic sense to take a short term loan with double digit interest rate for a long-term project. Similarly, it is not viable to take long-term loan, where available, with double digits interest rate on low income which most loan seekers have.

For these and more, we reason that the solution to the problem of the mortgage institutions in Nigeria is to create the needed environment that will enable growth of the industry such that the Industry has to improve.

Also, Mortgage operators have to be less opaque while property developers have to be encouraged to build mortgage-viable and ready properties. This will be achieved when interest rates on mortgage loans are reduced to single digits and readily made available.

The mortgage sector should create a situation where the whole process of securing mortgage has to be made clearer and more transparent and mortgage has to be made available on the retail such that every time a loan seekers goes out seeking, he sees one.

CBN Policy Intervention

Earlier, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele had laid out a five year policy thrust that included the recapitalizing the banking industry, it was feared that the policy might cascade to the fledgling mortgage sector.

Again, the mortgage industry in the country has disquieting statistics enough to compel conclusion that the problem of the industry goes beyond recapitalization. Available records also show that the size of the mortgage market as at 2010 was N284 billion and in 2012, it rose to N348.1 billion. In 2016, the industry was valued at N518.76 billion. In spite of this, only about 5per cent of the country’s housing stock estimated at 13.7 million units is in formal mortgage.

Another worrisome statistics on this Industry shows that for the whole period spanning between 1960 to 2009, the industry generated only 100,000 transactions and 181,519 transactions from 2010 to 2016. Worse still, the contribution of mortgage finance to Gross Domestic Products (GDP) in the country is less than 1 percent.

Despite the recapitalization and the recent N18 billion refinancing of some Primary Mortgage Banks (PMBs) by the Nigeria Mortgage Refinance Company (NMRC), the industry’s impact on the housing sector remains to be seen.

It is believed that the inability of the industry to impact positively on the housing sector in spite of the improved liquidity means there are fundamental problems that needs to be tackled.

Perhaps, the federal government has taken major steps to revamp the real estate sector and key among the numerous projects are the National Housing Portal which was launched by the Hon. Minister for Housing, Babatunde Raji Fashola who informed Nigerians to apply online for the national housing scheme.

More importantly, the federal government needs to revamp the mortgage institutions both in state and federal levels to build stronger institutions in the real estate sector and boost the sector growth and perfomance to increase market shares, build local capacity and create more jobs for indigenous manufacturers through sourcing for local contents and raw materials.

Over the years, housing supply constraints and asymmetric information on existing housing policies have prevented Nigeria from keeping up with the rapid urbanisation rate.

Also, lack of policy continuity arising from political risk and change of government over the years have stifled government efforts, thus, explaining the gap between the availability of affordable housing and the demand due to rising population.

Furthermore, the sector faces other hurdles such as proper land administration constraints; weak adherence to real estate market regulations; unhealthy speculation by stakeholders in the sector; low private sector involvement, poor housing database and mapping constraints as well as rising cost of building materials.

These challenges have all contributed to severely curtailing access to land despite the government’s best efforts to reform the mortgage sector.

But the government’s blueprint for the sector covering 2021-2025 stated that despite these challenges, the increasing demand for housing because of rapid urbanisation could be leveraged as a considerable engine for growth.

Experts’ Position

In a chat with LEADERSHIP, on the viability of the mortgage sector to bridging the housing shortfall in the country, national auditor of Real Estate Developer Association of Nigeria (REDAN) and managing director of Roccio Carrillo, Mr. Emmanuel Oyelowo explained that mortgage financing will help to address the housing unit shortfall in the real estate sector adding that moratorium will be given on the construction loan while stressing that the developer can also liquidate the loans before the moratorium is over. He averred.

He argued that if the mortgage institutions are working, realtors and developers would not need construction finance to develop housing projects because the mortgage sector will handle the funding and make payment by milestones.

According to him, the mortgage institutions will boost housing subscribers in the country and make housing affordable and cheap with little interest rates.

While stressing that government should be the enabler of businesses by creating the environment for the mortgage refinance institutes to thrive.

Oyelowo affirmed that if the government can allow the mortgage industries to operate and since they’ve created National Mortgage Refinance Company (NMRC) and they are not dealing with portfolio developers, there will be massive housing projects and construction business in the real estate sector such that we will bridge the 22 million housing deficit shortfall in the country.

Commenting on the issue, managing director of Infinity Trust Mortgage Bank plc, Olabanjo Obaleye stressed the need for government to come to the aid of the mortgage institutions over the cash crunch caused by the Covid 19 pandemic.

Obaleye noted that government did not provide financial relief and other structural assistance to mortgage banks and the housing sector despite the challenges posed to the real estate sector by COVID-19 pandemic, he stated.


A real estate player and construction business expert, Mr. Dele Faronmbi said there should be a synergy between state and federal ministry of housing to reach a consensus to create effective mortgage system for Nigeria’s teeming population vis-a-vis affordable housing infrastructure that will bridge the housing unit divides in the country.

On his part, Emmanuel Oyelowo hinted that the resultant effect of past legislation created more problems in the real estate sector adding that the land use degree that became Land Use Act as amended is a hydra-headed decree and law in the real estate sector while stressing that until the ownership of Land is no longer vested on the government, we will continue to have problems.

He further affirmed that the Magodo Estate faceoff as one problem in the real estate market where government take over lands from individuals and bulkanize them for sharing among cronies, family members and business partners.

He said if lands are apportioned to customary land owners there won’t be any problem in the real estate sector, key among the problematic factors he cited are politicalisation of land matters, documentation, non-availability of raw materials, access to finance and problems of past legislation.

Source : Leadership