Mr. Kehinde Ogundimu, Managing Director/CEO of the Nigeria Mortgage Refinance Company (NMRC) has said that the company approached the National Pension Commission (PenCom) to address the difficulties faced by Nigerians in meeting the 20% down payments for mortgages. 

Ogundimu stated this while speaking as a panellist at Nairametrics Industry Outlook themed “How to succeed in Nigeria’s Real Estate in 2024: Challenges & Opportunities in a High-Cost Environment. 

He noted that the company observed that many Nigerians struggle to meet the 20% equity down payment required for mortgages. 

20% equity down payment not unique to Nigerians 

According to him, this challenge isn’t unique to Nigeria; even in the US, it typically takes seven years to accumulate this amount. 

  • “We noticed that a lot of Nigerians couldn’t come up with a 20% equity down payment that is required when you want to get a mortgage. 
  • For example, if you want to buy a house for 100,000, just to make sure that you have commitment, people were asking that you should pay 20,000 and then get a loan for 80,000.  
  • A lot of people could not, you know, and it’s just not in Nigeria. Even in the US, it takes about seven years for you to be able to save that 20% of your equity,” he said.  

25% of Retirement Savings Account (RSA) balances 

Ogundimu noted that in order to address the obstacle, the company collaborated with stakeholders and approached the National Pension Commission (PenCom) to propose allowing individuals to access 25% of their Retirement Savings Account (RSA) balances for mortgage down payments. 

This approach according to him ensures that funds are directed towards essential investments like housing rather than non-essential purchases. 

He noted that after a year or two of advocacy, this initiative materialized, enabling individuals to utilize 25% of their RSA balance as a down payment for house purchases. 

Ogundimu noted that the regulatory constraints currently prevent the company from extending its services further down the value chain to refinance mortgages. 

  • “We are actively engaging with regulators to rectify this, aiming to ensure that the benefits originating at the bottom of the chain can be transmitted upstream,” he said. 

Issue of tenor mismatch 

He said the primary achievement thus far has been addressing the major barriers within the mortgage industry, particularly the issue of tenor mismatch. 

  • “Previously, individuals struggled to secure appropriate funding due to disparities between the funding’s source and its intended use.  
  • Banks, constrained by short-term funding, were unable to offer loans with tenors exceeding five years. However, since our intervention, this issue has been entirely resolved. 
  • Banks now have access to long-term funding, enabling mortgages with durations of up to 20, 25, or even 30 years, all thanks to NMRC,” he said.