Developers hinge NMRC’s success on sustainable capital flow, strict regulation

Real estate developers have said that the success of the newly-established Nigerian Mortgage Refinance Company (NMRC) depends largely on sustainable capital flow and strict regulation, describing these as veritable tools for meeting the company’s target of increasing homeownership level through an effective mortgage system.

NMRC, a secondary mortgage institution, was set up with the primary aim of increasing liquidity in the mortgage system, leading to affordable housing finance. It is expected to be a focal point for creating an enabling environment for housing finance by providing long-term funds to be given at low interest rate.

Since its registration by the Central Bank of Nigeria (CBN), with the expected disbursement of the $300 million interest-free loan from the World Bank yet to commence, industry players are of the opinion that a sustainable capital flow and strict regulation of primary mortgage institutions are key to the company’s sustenance.

“Though the company won’t directly disburse funds to lenders, but through mortgage institutions, the quantum of funds and success will largely depend on its capacity to keep on having access to capital so that it can sustain lending to these institutions,” Adetokunbo Ajayi, managing director/CEO, Propertygate Development and Investment plc, told BusinessDay on the sidelines of the firm’s recent Annual General Meeting.

Ajayi further argued that the commendable initiative, which remains a scratch on the surface of the country’s mortgage industry, would also demand strict enforcement of rules and regulations to ensure it achieves its target.

“The mortgage institutions who have the sole responsibility of lending to intending homebuyers should be effectively regulated to ensure they play according to the rules by lending only to genuine borrowers,” he emphasised.

He further argued that the absence of an effective mortgage system had not only slowed homeownership rate in the country but had also compelled real estate developers to create an ‘artificial mortgage’ system through credit arrangement, with resources that should have been employed for subsequent developments.

“For instance, you have developers demanding for just 50 percent of the total cost of a housing unit, while the balance is paid with minimal interests,” Ajayi said, adding that an effective mortgage system would address such situations.

Weyinmi Edodo, CEO, International Property Development Consortium (IPDC), in an earlier interview with BusinessDay, had noted that for the newly-established company to act as a catalyst in growing the country’s real estate sector, “the regulatory body has to be on top of the process and see that the mortgages are real; that the values are real and not inflated just to get the money out and be diverted into other ventures”.

“If things are done fairly, with real mortgages created, not ghost ones, and monies are used for properties and not diverted, NMRC is a commendable initiative that should drive boom in real estate sales because of the affordable mortgage it promises,” he added.

Edodo also argued that the NMRC would help the real estate market to maintain some stability despite what the economic outlook projects.

ODINAKA MBONU