Five Mortgage Trends to Watch Out For in 2018

The real estate industry in Nigeria is evolving at a constant pace and it’s time to take a closer look at mortgage trends in Nigeria that will shape the real estate industry for the rest of 2018. Let us begin with the maximum mortgage loan for home seekers in Nigeria.

 

1. Maximum Mortgage Loan for Home Seekers

Barely 2 months ago, the Central Bank of Nigeria (CBN) pegged the maximum mortgage loan for home seekers at N50 million. This maximum mortgage loan is directed at home seekers in the informal sector, which is under the Nigerian Housing Finance Programme (NHFP).

Details of this are contained in the guideline for the uniform underwriting standards for the informal sector, which was released by the CBN earlier this year. It spells out formalities for mortgage banks to offer loans to those in the self-employment space as well as employees.

If you are in the self-employment space, you are categorised under the micro, small and medium-sized enterprises. It is important to point out here that the informal sector contributes over 58 percent of the nation’s economy.

You can use the mortgage loan here to finance the purchase or refinance an existing mortgage loan. As an eligible borrower, you can also use the loan to purchase a single family home or an apartment in a multi-unit building. This is a plus for mortgage trends.

 

2. Nigerian Banks Looking to Drive Mortgage Loans

Banks in Nigeria have been encouraged to enlist housing cooperatives and associations into the pool of mortgage loan for home seekers. The idea behind this is to the initiative would give those without structured income access to mortgage loans for property acquisition.

The National Housing Finance Programme under the CBN will keep a close tab on the number of mortgages created in the informal sector. As a borrower, you will receive homebuyer counselling prior to closing on your loans.

Financial institutions in Nigeria are expected to come up with mortgage counselling classes to educate borrowers on their rights and obligations of homeownership as well as the legal consequences of default. This would be done just as it is carried out in other sectors of the economy and nations of the world. This is a good score for mortgage trends.

If you are wondering how a property will be valued under this scheme, licensed and independent valuers who are members of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) will be prequalified by the 34 licensed mortgage banks to value property to be listed in the scheme.

 

3. The Role of Mortgage Banks

Mortgage banks in Nigeria will market the benefits of mortgage loans to eligible borrowers. They will also learn from the microfinance banks that have a wealth of experience working with the informal sector of the economy. This is healthy and interesting for mortgage trends in the country.

The end goal here is to provide mortgage loans to Nigerians as highlighted by the President of Mortgage Banks Association of Nigeria (MBAN), Mr Niyi Akinlusi at a workshop for mortgage banks.

The CBN launched the NHFP in 2017 with the aim of increasing access to housing finance and home ownership for Nigerians.

 

4. Channelling Pension Funds Into Mortgage Assets

The year 2018 has been rife with calls from the Mortgage Bankers’ Association of Nigeria to the National Pension Commission (PenCom) and the Central Bank of Nigeria on the need to invest part of the N7.5 trillion pension funds in mortgaging. This scores well for mortgage trends.

Such an investment, according to the Mortgage Bankers’ Association of Nigeria is expected to allow home seekers entry into a mortgage with a single digit interest rate.

The MBAN has made it clear that the there is access to such funds in other countries. This makes it easy and explains why people there have mortgage loans with single digits.

According to MBAN, the goal is to encourage home ownership and reduce housing deficit across the country. You should also know that this move is different from the stipulated 25 percent pension Retirement Savings Accounts (RSA) for mortgage loans.

 

5. Opportunities in the 2018 Budget

As Nigeria continues to experience a steady rise in its population as well as an increase in urbanisation, the Federal Government has prioritised the need to focus on its goal of affordable housing, particularly for low-income earners.

A demographic emergency is not a situation to be taken for granted, which explains why this has received this level of attention from the government. A total of N35.4 billion was set aside in the 2018 Appropriation Bill to tackle the housing needs of the nation’s workforce. This was done under the Nigeria  Housing Finance Programme (NHFP).

The success of this effort is hinged on the quite a number of factors and one of such factors is the effective implementation of the scheme.

Final Thoughts on Mortgage Trends

Mortgage loans and refinancing will thrive in an enabling environment that is rich with positive economic indices. As expected, the mortgage industry comes with a mixed kettle of opportunities and risks but Nigerians but Nigerians can expect the delivery of more affordable homes. These houses will be delivered through a persistent effort into looking at activities around primary mortgage origination as well as secondary mortgage refinancing.

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