Experts task on policies drive access to mortgage, homeownership

Governments at both state and federal levels in Nigeria need to come up with a comprehensive policy that recognises average household income in order for more people to have access to mortgage and, by extension, improve homeownership level in the country, experts have canvassed.

Nigeria has a staggering housing demand-supply gap and the experts have blamed this on lack of a functional mortgage system and absence of a social security system in the country. “Nigeria lacks a system that is dedicated to funding housing for low income families”, they maintain.

“There are some basic problems with the mortgage system in Nigeria one of which is accessibility and the second is clarity. You find that when you approach a mortgage bank for loan, it will ask you for things that you cannot provide. So, mortgage is simply not accessible for those that actually need it”, Jideofor Michael, an estate developer, explained in an interview.

“In terms of clarity, there is no unified system”, he added, noting that there is nowhere the government has published a mortgage rate which the mortgage banks have to use or a mortgage standard or process which the banks have to fit into.

This means that there is no clarity in the mortgage system in Nigeria and if there is any such thing, it is not yet publicised and so people don’t know and, if people don’t know, it means such a process does not exist.Interest rate is another major problem in the mortgage system and this is because a borrower cannot take a long-term mortgage loan with double interest rate on low income.

Interest rate is structured in such a way that if a home builder borrows at a 20-percent rate, and he is building at a slow pace with such a loan, the amount he will owe at the end will outstrip the growth of his salary, meaning that the rate is not viable. “The basic principle of a mortgage is that you must have steady income and in a gainful employment. You must be able to provide income in multiples for the property that will be built for your use. If your income is N4 million per annum, for instance, and the cost of the property is N30 million, unless you want to steal, you cannot afford that property”, Michael pointed out.

The experts recommend legislation towards mortgage process, adding however that legislation depends on how it is applied. They explain that in some countries, a body is set up that manages mortgage subsidies. This body delivers mortgage either through banks or by itself.

They also advise that the mortgage industry has to improve, and developers have to be encouraged to build mortgage-viable and ready properties just as mortgage interest rates have to be reduced to single digit and made available.

“The whole process of securing mortgage has to be made clearer and more transparent, and the mortgage has to be available on the ‘retail high street’ such that every time you go out looking for it, you see it. In addition, developers should be encouraged to build across all property bands; simplicity needs to be introduced into the regulatory system to make it cheaper and faster to develop”, Paul Onwuanibe, group CEO, Landmark Group, canvassed in an interview.

According to him, the import system needs to be tidied up to be faster, more efficient and less punitive to the building trade by allowing quality products in without attracting huge duties and red tape, hoping that this simplicity would reduce the cost of housing.

CHUKA UROKO