ABUJA, Nigeria (CU)_Considering the combination of low wages and high cost of living encountered by majority of Nigerians, people have little room to save towards housing, which has resulted in a 17 to 22 million deficit in housing units in the country. Therefore, in order to shrink this deficit, and house more citizens, greater efforts are needed to improve the public’s access to affordable housing finance. To tackle this issue, some of the most developed countries in the world, including the US, the UK and many European nations, have promoted the adoption of mortgages as a path to own a home, although this less popular in Nigeria.
Against this backdrop, the Federal Mortgage Bank of Nigeria (FMBN), an apex mortgage institution in Nigeria, established under the Indigenization Act 1973. One of the key features of the institution is that it offers mortgage loans of up to N5million with zero equity requirements and loans between N5 million and N15 million, with a 10 per cent equity down payment. Moreover, the FMBN provides loans under single digit interest rates per annum, for long payment tenors of up to 30 years. This is in stark contrast to rates on housing loans in the open market which range from 18 to 25 per cent, and offers a maximum of 20 years in loan repayment tenors.
The FMBN has also launched several attractive housing products, including the FMBN National Housing Fund (NHF) Mortgage Loan which grants concessionary loans to accredited Primary Mortgage Banks at an interest rate as low as 4 per cent, through the funds accumulated under the NHF scheme. Subsequently, these funds are used by mortgage banks to provide loans to qualified Nigerians who contribute to the NHF scheme, at an interest rate of 6 per cent with loan repayment tenors of up to 30 years.
The individual Home Construction Loan is another impressive product offered by the FMBN, which enables NHF contributors who own unencumbered land to undertake self-construction. One of the most attractive schemes offered for an average Nigerian worker is the Rent-To-Own Housing Scheme, which allows an individuals to instantly move into a housing property owned by the FMBN as a tenant, and pay towards the ownership of the property in monthly or annual instalments over a period of up to 30 years.
The institution also encourages cooperative societies to develop houses for their members through the Cooperative Housing Development Loan (CHDL) which provides loans of up to N500 million, at an interest rate of 10 per cent, for such societies which have acquired a plot of land and intends to develop houses for their communities.
Therefore, it is apparent that the FMBN plays a key role in shirking the growing housing deficit in Nigeria through its products and schemes which aim at achieving high mortgage penetration levels in the country. Since the launching of the NHF Scheme nearly three decades ago, the FMBN has disbursed a total of N282.914 billion of which mortgage loans account for 46 per cent. Given the new heights reached by the institution over the years, the FMBN must be encouraged and its finances must be strengthened in order to achieve the government’s aim of greater social housing delivery.
