THE vice chairman of the Estate Surveyors and Valuers Registration Board of Nigeria, Stephen Jagun, has decried the struggling state of the Nigerian mortgage system, stating that higher interest rate and unstable foreign exchange affect its success.
Jagun, an industrial expert in the building business, shared this concern in an interview with The ICIR.
“If you check anywhere in the world, one of the primary needs of man is shelter. This is critical,” Jagun stressed.
He said one of the major issues is access to funds and challenges of higher interest rate funds for mortgage institutions.
“In Nigeria, people in the mortgage business struggle to get funding with a benchmark interest rate above 27 per cent.
“So, it’s the source and funding costs that are making mortgages not viable,” he explained.
According to Jagun, the Nigerian system and its policies are not allowing investors to bring money from abroad into the building industry.
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“They feel unsafe because most of our policies are based on sentiment and someone’s body language. When they do bring funds at all, they do so on a short-term basis,” he maintained.
The facility manager noted another big challenge is the duration it takes for a housing mortgage to be fully paid for.
He said, “Also of concern is the duration of the mortgage. It takes close to 20 to 25 years for a mortgage to be fully settled. In a country where there’s no job security, it’s a challenge. It’s even harder for banks to stand on such long-term lending, or else they will go under.”
Jagun established that when a mortgage agreement is reached between a developer and a subscriber, that most times results in a lawsuit when the subscriber suddenly starts defaulting on the instalment payment.
He explained, “I attended the launch of a mortgage bank that wants to partner with some developers to bring delivery and value to the market and deliver on the plans.
“The idea is for developers to bring something to the table, and the mortgage bank to take it from there. By so doing, the developers are not afraid their projects will get stuck as the mortgage bank is to fund it.”
Jagun further raised concerns about the affordability and the decency of a mortgage plan for the homeowners.
The ICIR reported that Nigeria faces a growing housing deficit which has risen from about seven million in 1991 to an estimated 28 million in 2023.
The Federal Mortgage Bank of Nigeria (FMBN), founded in 1956, is the apex mortgage bank in the country.
The FMBN, which is responsible for providing mortgages to low-income earners through the National Housing Trust Fund (NHTF), has been facing operational and financial capability restraints that limit its efficiency over the decades.
Despite the crucial role the mortgage industry plays in the Nigerian economy, findings show that the mortgage sector has long been plagued by inefficiencies, a lack of transparency and complex bureaucratic hurdles that make homeownership an uphill battle for millions of Nigerians.
In 2023, the Nigerian government put the housing deficit statistics at 28 million units with an estimated funding need of N21 trillion.
These statistics allude to the need for urgent interventions in the Nigerian housing sector.
Also, at a recent forum in April this year on the establishment of the National Mortgage Registry (NMR), the managing director/chief executive of FMBN, Shehu Usman Osidi, noted the inefficiency in the mortgage system.
“The current mortgage system in Nigeria is notoriously slow and bureaucratic, with approval timelines often stretching into months or even years,” Osidi reportedly said.