‘Affordable mortgages, private sector critical to catalysing housing demand, supply’

The Federal Government has emphasised that affordable mortgages and the contributions of the private sector are critical to catalysing housing demand and supply in the country.

Managing Director, Federal Mortgage Bank of Nigeria (FMBN), Mr Shehu Osidi, who spoke on: “The Place of Affordable Mortgages and Private Sector Operations in Catalysing Housing Demand and Supply” at 2024 conference of Property and Environment Writers Association of Nigeria (PEWAN), themed: “Resolving the Financial and Regulatory Dilemma to Achieve Renewed Hope Agenda in Housing”, in Lagos, argued that addressing Nigeria’s housing deficit requires the public sector to provide an enabling environment and collaboration with the private sector to drive housing delivery.

While reiterating the bank’s commitment to working with stakeholders to increase access to affordable housing finance at six per cent and promote private sector participation in the sector, Osidi noted the imperative for governments at all levels and sub-nationals to create the enabling environment for affordable housing development.

This, he said, must include providing the appropriate legal and operational frameworks to reduce transaction costs and time, as well as incentives to encourage private sector investments. “In Nigeria, we are faced with a huge population estimated at over 200 billion growing at about 2.52 per cent yearly, the high urban-rural ratio of about 50 per cent also growing at an astronomical rate of 4.3 per cent yearly, and perennial unfavourable regulatory and macroeconomic factors. The combination of these has resulted in a significant housing gap estimated at millions in the double digits,” he said.

Osidi, who was represented by the General Manager in the bank, Oladapo Fakeye, said the role of affordable mortgages in addressing the housing deficit cannot be overstated. Under President Tinubu Administration’s Renewed Hope Agenda, he said the Federal Ministry of Housing & Urban Development is rolling out the Renewed Hope Cities and Renewed Hope Estate housing projects to deliver 100,000 new homes across the country.

“FMBN as the apex mortgage institution is playing a huge role by driving housing affordability and accessibility. FMBN has issued a N100 billion off-taker guarantee to real estate developers engaged under the Renewed Hope Housing projects to facilitate project delivery. By this, we will provide mortgages at single-digit rates of six per cent and a tenor of up to 30 years to Nigerians interested in becoming homeowners.

“This transaction arrangement highlights the significant role of the FMBN in housing delivery. FMBN is empowered to collect and manage the National Housing Fund (NHF) scheme as a pool of long-term funds funded by contributions of 2.5 per cent of workers’ monthly incomes. It remains one of the institutions that provides affordable financing to both the supply (construction) and demand (off-take) sides of the housing market.

The bank’s loan products are granted on concessionary basis that are below market interest rates and for long tenors to ensure affordability.”

Osidi stressed the need to address the rising cost of housing delivery due to escalating cost of building materials. The bank also disclosed that it increased loan limits for individuals from N15 million to N50 million, while the equity requirement was reduced from as high as 30 per cent to 10 per cent to ensure affordability.

Speaking at a panel section, Chairman, Association of Town Planning Consultants of Nigeria, (ATOPCON) Lagos Chapter, Dr David Olawale, former ATOPCON president, Dr Moses Ogunleye, former president, Nigerian Institute of Building, Mr Kunle Awobodu, former National Chairman, Nigerian lnstitution of Mechanical Engineers, Mrs Funmilade Akingbagbohun, Executive Secretary, Association of Housing Corporation of Nigeria, Tonye Eniola and Chief Executive Officer, Tobykemsworth lnvestment Limited, Dr Adekunle Raphael-Monehin, called for collaboration between professionals and the government rather than working in silos towards making housing accessible and available to Nigerians.