1. Mortgage financing of home ownership in Nigeria:
The challenges and the way forward
Presentation by:
‘Niyi Akinlusi (President MBAN) @
11th Abuja Housing Show

2. Presentation outline……
The Housing Sector in Nigeria
Challenges
Way Forward
Recent Developments

3. The Housing Sector

4. Inadequate/ poor housing reflects poor economic status of a nation.
The Housing Sector
Housing
sector plays an important role in a nation’s economy and a priority globally
Inadequate/ poor housing reflects poor economic status of a nation.
Development of housing sector directly affects citizens with multiplier effects on other sectors.
Home ownership requires huge capital outlay usually unaffordable for low and medium income.
For economic and social reasons, the current government is paying more attention to home ownership.

5. The Housing Sector
Sources of housing funds
Pension and Insurance Funds
Specialized Institutions (NMRC, MWFL)
Federal/State Government
Federal Mortgage Bank of Nigeria
Primary Mortgage Banks (PMBs)
Commercial Banks
A developed housing sector has significant impacts on citizens by
Providing shelter
A decent house impacts on productivity as a result of improved health and social well being
A Store of value as a durable asset (wealth creation)
A measure of standard of living.

6. Opportunities for mortgage delivery
The housing sector represents a growth reserve for the Nigerian economy with immense potentials
An above average global population growth at 2.8%
An estimated million housing deficit in the country
Only 5% of existing housing stock are estimated to be financed by mortgages
Industry is under-developed with total asset of N390bn as at 2016 representing 0.24% of GDP compared to 70% in other Countries
One of the fastest urbanization rates in the World at 4.8%
Source: CBN: Developing mortgage sub-sector

7. Potentials of the Mortgage Industry
Mortgage assets is the largest financial asset class in the World. The US housing market is worth about USD29 trillion
It is capable of growing the Nigerian GDP to 70-80% of its present size
Increase in stock of affordable housing would accelerate the growth of Nigerian middle class, deepen the Nigerian market & increase aggregate demand
Investment in housing construction would accelerate growths in other sectors on the value chain.
Contribute to the social and political stability
Source: CBN: Developing mortgage sub-sector

8. SUPPLY AND DEMAND DYNAMICS IN THE NIGERIAN HOUSING MARKET

9. The Housing Sector
….Challenges

10. Dearth of mortgage finance
Challenges of Housing Financing
Dearth of mortgage finance
Limited supply of loanable funds with long duration.
High inflation rate
Instability of macroeconomic indices – exchange rate, unemployment, per capita income
Mortgage infrastructure deficits, have heightened industry risk
Low returns has caused several PMB to either upscale to commercial bank or downscaling to MFB.
The percentage of mortgage loans to Gross Domestic Product (GDP) is very low, i.e. less than 0.5% compared with what obtained in other climes
Investors are discouraged from injecting more capital due to the low profitability.
U.S %
U.K- 64 %
Germany – 55% Thailand -15%
SA - 20%
India – 5%
Ghana - 3 % (Source: CBN)

11. Cumbersome Legal Regulatory Framework for Land Acquisition
Challenges of Mortgage Financing
Other Challenges
High Interest Rates due to high cost of funds.
Complex and expensive process of property titling and land ownership.
Inadequate cadastral system constraining mortgage finance.
Weak legal regulatory framework
Absence of effective Foreclosure Law
Cumbersome Legal Regulatory Framework for Land Acquisition
Inadequate Housing Stock for Affordable Housing
Lack of infrastructure with high cost of real estate development
High cost of building materials
Low savings culture of Nigerians

12. The Housing Sector
…way forward

13. …..the way forward De-risking the sector to attract private capital.
Deepen the mortgage market and continued standardization of mortgage process and promotion of financial inclusion.
Fixing mortgage infrastructure deficits.
De-risking the sector to attract private capital.
Continued diversification of the economy for stable macro economics.
Reduced Transaction costs and easing cumbersome process of registration and perfection of titles and legal mortgages
The Land Use Act (1978) which makes it mandatory to obtain Governor’s Consent on all Mortgage transactions, both at the Primary and Secondary Market Levels should be amended.
Institution support for mortgage repayment and servicing.
Continued standardization of mortgage process
Review of Mortgage Related Laws in the Country and passage of the Bills e.g. foreclosure law, securitization, Mortgage Asset Registry
Mortgage Asset Management Initiative.

14. The Housing Sector
…recent developments

15. Mortgage Warehousing Facility Limited
Recent Developments in the Nigerian Mortgage sector
Mortgage Warehousing Facility Limited
(pre-finance)
Long Term Funding
Secondary Mortgage Market
Federal Housing Loan Board
Recapitalization
FG Initiatives
Ease of doing business Initiative
Foreclosure Law and Improved Land Registration system
In progress in 21 states
Economic Recovery

16. Recent Developments in the Nigerian Mortgage sector
Uniform Underwriting Standards
Informal, Self-employed and Non-Interest Sector
Uniform Underwriting Standards
Uniform Underwriting Standards
Review of Operational Guidelines of PMB
Review of Operational Guidelines of PMB
Stabilizing mortgage Sector
Recapitalization
Capacity Building for mortgage sector

17. Mortgage Banker’s tariff
Recent Developments in the Nigerian Mortgage sector
Others:
Rent 2 Own
Mortgage Banker’s tariff
Improved Repayment & Collection System (ADD & BVN)
Collateral Replacement Indemnity (CRI) – Equity Insurance
Diaspora Mortgage
Default Insurance