The Federal Mortgage Bank of Nigeria (FMBN) has reiterated its commitment to addressing the challenges facing the mortgage industry in the country. The FMBN MD/CE, Mr. Madu Hamman, stated this during a Q1 Mortgage Sector Virtual Forum, organized by FSS2020, with the theme, “Navigating Current Challenges in the Nigerian Mortgage Market.”

In his remarks, Hamman acknowledged that the cost of borrowing within the mortgage sector is one of the biggest challenges facing the industry. He explained that the inflationary trend in the economy had resulted in higher costs of building materials, which, in turn, had led to higher prices of properties and housing across the board. This, he said, had affected affordability levels across all mortgage institutions.

He noted that the National Housing Fund (NHF) Scheme, which the FMBN manages, is fixed at a single-digit interest rate, which allows contributors to access mortgage loans within the single-digit interest rate. However, Hamman emphasized that if the mortgage sector is to be deepened, there is a need to look outside the Fund because the contribution to it has not grown substantially enough to address the country’s housing challenges.

To address this challenge, Mr. Hamman identified the need to engage with Government and institutions at the national level to introduce a subsidy or intervention funds for the mortgage sector. He explained that it is only through such intervention funds that the effect of the increasing rate of interest within the mortgage sector could be cushioned.

Hamman further stated that the FMBN would continue to deepen contributions to the NHF and has introduced various products for the informal sector to key into the Scheme. This, he said, would enable them to grow the Fund, cater to those who are contributors, and give them better returns or real rates within the mortgage lending market.

“If we continue to rely on what is obtainable from the capital market or from the money market, it is not going to be palatable for borrowers who are willing to access mortgage loans to be able to pay back. It will put strains on mortgage repayments, it will lead to higher rates and therefore seriously affect the books of mortgage lenders.” Madu Hamman, MD/CE, FMBN