Towards addressing high-interest rates in the real estate market, the Federal Mortgage Bank of Nigeria (FMBN) has advised stakeholders to engage the Federal Government and institutional regulators towards creating special intervention funds and subsidies for the mortgage industry.

FMBN Managing Director/Chief Executive Officer, Madu Hamman, led the call at a virtual forum organised by Central Bank of Nigeria Financial System Strategy (CBN FSS 2020) tagged, ‘Navigating current challenges in the Nigerian Mortgage market’.

While noting that the Central Bank of Nigeria recently adjusted the rate to address inflationary challenges affecting prices of building materials, cost of funds and other items, which has resulted in high prices of housing across board, Hamman said the high cost of borrowing in the sector is one of the biggest challenges facing it at the moment.

He said the FMBN, which manages the National Housing Fund (NHF), fixed the rate at single digit for NHF participants to access mortgage loans. However, he lamented that the contribution to the fund has not grown substantially to address the housing challenge in the country. He stressed the need to look outside the contributory fund to provide the cheapest source of funds for mortgage origination across the country.

He said: “We need to engage government and regulatory institutions at the national level and encourage provision of subsidies or special intervention funds for the mortgage sector. It is only through such intervention funds that we will be able to cushion the effect of increasing rate of interest within the mortgage sector.

“If we continue to rely on what is obtainable from the capital market or the money market, it will not be palatable for borrowers, who are going to access mortgage loans repayment and it will affect mortgage lenders.We will continue to work towards deepening the contribution to the fund and introduce various programmes for the informal sector to key into the NHF scheme, grow it and cater for the contributors for better returns.”

The Executive Director, of Housing Development Advocacy Network, Mr. Festus Adebayo, said the environment for mortgage lending is not conducive because of the absence of property rights, requirements to obtain governor’s consent, inefficient land management systems and high costs of property transactions.

He said there is a need to strengthen the NHF or significantly reform it to redress the balance between contributors and borrowers, increase the capital requirements for primary mortgage banks and make loans available through the NHF only to those that meet the standards.

“We need to put the FMBN on a stable footing and develop its facilitation role, reform the arrangement for foreclosure, develop a mortgage insurance programme, remove the need for Governor’s consent for land transactions, introduce large-scale land registration programmes and facilitate the acquisition of title by existing occupiers of property and introduce comprehensive building code and provide protection for buyers of houses during the course of construction,” he said.

Adebayo said: “With commercial banks putting increasing resources into developing their mortgage market, primary mortgage banks are bound to lose market share, with the exception of those that are operating as subsidiaries of the commercial banks.

The financial system is dominated by retail deposit banks, which account for over 90 per cent of the assets of financial institutions.”

He explained that foreclosure procedures are cumbersome and slow, adding that given the difficulties of the judicial process, lenders use a number of devices including a power of sale, which provides limited rights to the borrowers and at times enforced with some degree of brutality.

“Federal mortgage bank must be strengthened. All outstanding mortgage-related bills in the national assembly must be followed up by stakeholders,” he added.

The Managing Director, of Homebase Mortgage Bank, Dr. Femi Johnson, emphasised the need to de-risk the market and commoditise the mortgage sector for more Nigerians to have access to the mortgage.

He stated the need for improved advocacy and awareness for the public on the benefit of mortgages and urged operators to be cyber security conscious as hackers intensify activities with improved adoption of technology in the industry.

Managing Director, of Millard Fuller Housing Foundation, Sam Odia, said navigating current challenges in the mortgage market would require adopting new and innovative approaches to addressing the issues, while efforts should target solutions to the low-income masses that need them most.

He disclosed that the foundation is developing a N1 million incremental house as a basic starter unit for all workers and school leavers. This, he said, was inspired by FMBN’s most popular product, the N1m Home Improvement Loan. He charged the FMBN to target delivery of N1m per housing unit schemes across the country.