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Eight banks get approval for N10b mortgage refinancing loan

By Chinedum Uwaegbulam
10 May 2015   |   11:47 pm
HISTORY of some sort will be made this month, following plans by the Nigerian Mortgage Refinancing Company (NMRC) to provide its first tranche of refinancing for existing mortgage loans in the market, totaling about N10 billion, which will deepen affordable housing processes, especially for first time buyers.
Prof. Charles Inyangete

Prof. Charles Inyangete

HISTORY of some sort will be made this month, following plans by the Nigerian Mortgage Refinancing Company (NMRC) to provide its first tranche of refinancing for existing mortgage loans in the market, totaling about N10 billion, which will deepen affordable housing processes, especially for first time buyers.

The new deal is coming as part of the bargain by NMRC to provide mortgage lending institutions with access to long-term finance at an affordable interest rate, and enabling mortgages to be issued by these institutions to Nigerians over a longer tenor. About 20 institutions including commercial and mortgage banks are members of the mortgage lending banks.

Observers believe that the new initiative would also set the stage to develop both the primary and secondary mortgage markets by raising long-term funds from the domestic capital markets and foreign markets to provide accessible as well as affordable housing in Nigeria.

Specifically, the refinancing will involve close to 600 loans for eligible participants of the affordable housing scheme of the Federal Government already in the market warehoused by eight mortgage lending banks.

“This is to fulfill our mandate to bring liquidity into the market. Activity is starting this month with the first refinancing of existing mortgages in the market, called the legacy loans,” according to the Chief Executive Officer of NMRC, Prof. Charles Inyangete.

Inyangete who confirmed the development at a workshop last week in Lagos, organised by the Nigerian Mortgage Refinance Company on Public Awareness and Capacity Building, said the refinancing is not automatic for lending banks, but would simultaneously be injecting the much desired liquidity into the Nigeria mortgage system.

“They need to meet regulatory standards for them to be part of the NMRC market by investing minimum threshold into NMRC.

The successful delivery by the NMRC on its mandate will unlock quantum opportunities in deepening and expanding Nigeria’s Mortgage Industry, the capital market, and pivoting Nigeria’s Gross Domestic Product (GDP) to new heights.

“In the first year, we have brought in uniform underwriting standards into the market. So, for the first time in Nigeria, we have standards that really determine how loans are originated, and evaluated.

That levels the playing field for everybody and it brings fairness to the market.

“We have reached to other industries, for instance, the pension fund will now allow you to use deposit for your home.  We also reaching out to the insurance industry to bring in a new product that allow their subscribers use their deposits and developers not only for the purpose of affordability, quality and ensure that they just only build, but something Nigerians want and still affordable.”

Barring any last minute hitch, the nation’s refinancing company will dole out mortgage loans this month worth N10 billion for eligible participants under the affordable housing scheme of the Federal Government through eight lending banks

Inyangete disclosed that NMRC key market drivers include investments in the development and deployment of the mortgage market system, a robust ICT platform, adding that a new model mortgage and foreclosure law awaiting adoption by State governments will introduce efficiencies in registration, titling, and foreclosure increasing local and international investors’ confidence.

The Director-General, Nigerian Insurers Association (NIA), Mr. Sunday Thomas, revealed plans to provide products that will enable customers to use their deposit for mortgage loans as well as discussing with NMRC to introduce insurance as a condition for getting mortgage loans.

He stressed that the insurance is very central at the lending level and property development stages. Under the proposed mortgage refinancing scheme, Thomas highlighted that insurance will protect the lender if the borrower dies before the loan is repaid and cushions the homeowners against destruction by flood, wind and other hazards.

Meanwhile, the participants at the workshop, comprises representatives of international development finance agencies, Nigeria’s primary mortgage banks, local and international capital market operators, industry regulators, policy experts across the globe.

A critical objective of the workshop was to prepare, educate, and position mortgage operators and stakeholders for the constructive boom in mortgage refinances, and investment vista from the much anticipated successful issuance of the NMRC bond in the capital market.